Inequality- Shifting the Debate: Clare Short speaks to Equality West Midlands

As a former Secretary for International Development known for her stridency, former Birmingham Ladywood MP Clare Short used her talk to inspire the members of Equality West Midlands into reimagining a different society and culture in which everyone has the opportunities to succeed.

Clare opened her talk by noting that despite being one of the richest countries in the world, the United Kingdom has become one of the most unequal countries in the world, with social mobility particularly declining. Although the Gross Domestic Product per person in the UK is the 22nd highest in the world, the number of British people having to visit food banks has tripled over the course of six months- a third of these were children. Poor economic growth, stagnant and rising living costs have deeply impacted on the poorest in British society which is already weakened by the disparities in the income of the highest and lowest: the 10% at the top take home 31% of the national wealth, whilst the 10% lowest earners only received 1%.

This fact wasn’t properly challenged by the Labour government who ended up presiding over an environment where previously good jobs had their wages squeezed down, and various protections and benefits removed. Now the Coalition government’s austerity cuts are having the biggest impact on the working poor.

These developments, along with the erosion of the quality of employment and the erosion of the tax mean that the model of the welfare state held since 1945 is ultimately being eroded and the solutions which one could propose to tackle inequality through this model are no longer likely to work. Instead, the trend is for inequality to increase: the United States is the most unequal county in the world whilst the growth in African economies based on commodities has led to corruption and great disparities between the African elite and the rest of their peoples. Meanwhile, there is very little public debate in Western countries about the issue of inequality or the fact that the economics that underpinned the post-Second World War settlement are long-gone.

Additionally, as Clare lamented, left-leaning political figures are not organisationally or intellectually in a condition to provide good answers to these problems- even social democratic parties in Scandinavia are being routed. British parties are trapped into a cycle of short-term thinking dominated by the views of focus groups and an agenda set by the media. Consequently, Clare fears that as the financial sector is set to grossly expand their assets by the year 2050 to 9 times the value of the UK’s national income, we are set for another round of boom and bust in the future. Clare said that we are trapped with a bust system, creating ever growing inequality and insecurity and that in order to escape the system, we need to completely reshape our society and economy…

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Clare called for politicians to focus on building a high-tech economy where education helps to develop the job prospects of young people, preparing them for working in high-quality jobs for good wages, instead of being constantly tested in the name of a global race. Additionally, Clare believes that a fundamental rethinking of Britain’s role in the world needs to accompany this transition. Part of the shift must include a greater emphasis on the development of the ‘green’ economy, creating lots of new jobs and opportunities.

Not changing course will have dire consequences for many people- the economy will grind along; wages will continue to drop; young people who are not necessarily academically gifted will continue to be failed by the education system. Additionally, Clare has a growing fear that people will turn in desperation to right wing parties promoting new forms of racism.

Not all is lost, however: the make-up of Britain is changing rapidly- Birmingham, for example, is a fine example of a multicultural city where the status quo is being challenged; the political capital of those people who wish to keep things the same is rapidly diminishing and politicians may soon find they are entirely behind the times. There are various historical examples of this phenomenon occurring again and again- but, as much as change relies on the public being revolted by, for example, the number of people using food banks, it also requires people who wish to bring about change to have a big idea that could bring about a ‘more wonderful’ future.

Clare urged everyone in the room who wanted to help to bring about this future to accept the reality of present circumstances and avail themselves of the interconnectedness of various campaigns- we can’t just solve one thing; we have to solve everything.  She also urged us to campaign for more transparency: the large organisations who are not paying the tax they should be exposed- Clare suggested that this may encourage small businesses to join the progressive side.

In a world that appears in some ways to be mimicking that of 100 years ago, where a rising power is challenging the status quo, it is ever more important that we approach the problems of old with new and fresh ideas. Clare’s talk demonstrated that we need a debate about the kind of future we want our children and grandchildren to live in- we have the opportunity to close the inequality gap and make life better for everyone in society.

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Redistribution or Pre-distribution?

What should we do about wealth inequality?

A talk by Professor Karen Rowlingson

Wednesday 17th October – 7.30pm

at Birmingham & Midland Institute

As Director of Research at the Institute of Applied Social Studies at the University of Birmingham and author of ‘Wealth and the Wealthy: Exploring and Tackling Inequalities Between Rich and Poor’ and ‘Wealth in Britain: A Lifecycle Perspective’, Professor Rowlingson’s ideas are at the forefront of policies on tackling income inequality. We are very pleased she will be joining us on 17th October at 7.30pm to talk about these policies. Please do come along and join us on Weds 17th October at 7.30pm at the Birmingham & Midland Institute.

The talk will be followed by a chance for the group to get together and discuss our current projects.  Please do invite friends and colleagues who might be interested.

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Equality West Midlands Presents: Danny Dorling on why income inequality is such an important issue for everyone [Review by Shaz Rahman]

On Wednesday 9th of May Equality West Midlands welcomed Professor of Human Geography Danny Dorling of Sheffield University to speak to us. He has written several books on the issue of income inequality and is widely respected within the field. Dorling’s work complements the Spirit Level well.

We held the event at the BMI in Birmingham City Centre and we were very excited by the turnout. Nearly 50 people attended, almost a full house, with a lot of the people not having been a part of EWM previous to the event. Moving on to Danny Dorling, he used various graphs, maps and diagrams based on academic research to demonstrate his rather startling arguments. On top of this Dorling happily took questions from the floor. In his presentation Dorling noted how in the 1920’s the level of income inequality reached similar proportions to what we see in rich modern unequal societies. The Wall Street crash followed, which was no coincidence. After the Wall Street Crash societies became more equal and after World War II better levels of economic equality helped create fairer societies where society as a whole benefitted from developments like in the UK the NHS.  Dorling used graphs to show how different countries have moved in different directions concerning equality from the late 1970’s onwards. Countries like Switzerland and Sweden decided to maintain their levels of income inequality, whilst on the other hand countries like the UK and America drastically changed their economic policies meaning that the latter countries became economically vastly unequal.

The consequences of these policies in countries like the UK and America are stark. Wealth has become concentrated in a small number of people at the top of society. Recently in America 1% of the population owned 20% of the wealth. The UK has similar figures regarding income inequality. In states like the UK those at the top hoard the wealth and in many cases try to avoid paying their debt to society through things like tax. Less wealth is left to be shared between the remainder of the citizens. Extremely unequal societies develop more societal problems than more equal societies. Social problems like obesity, teenage pregnancy etc tends to happen more in highly unequal societies than in more equal societies. Dorling pointed out that at a time when average wages and incomes are falling, leading to a whole heap of societal problems being made worse, the top 1% became considerably richer. How is this fair? More equal societies like the Netherlands and Denmark suffer similar problems but are able to absorb them much better than we do in the UK.

During the question and answer session we discussed a variety of issues. One of these issues was what direction the UK was heading towards as the rich are getting richer and the rest of us are getting poorer. One of the theories put forward by the audience was that events like the riots we witnessed last year in Birmingham would become more common. How can we move to a more equal society in the UK was another question asked? Dorling warned that if we had another financial crisis like the one in 2008 we would get greater equality, but at a monumentally high price. Dorling told us that we need to try and sway the public mood and put pressure on those at the top to tell them that their actions are unacceptable. The example of Aviva offers us a tiny beacon of hope.

Our first speaker event was a great success. Danny Dorling was an entertaining speaker who was not afraid to tackle difficult questions from the audience. I for one enjoyed the pretty graphs and diagrams and I think the rest of the audience did too. Hopefully this will be the first of many speaker events with influential people in the field of income inequality.

– This article was written by Shaz Rahman.  You can follow Shaz @ https://twitter.com/#!/ShazRahman30

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An Evening with Danny Dorling – Weds 9th May at 6.30pm

Please do come to the Birmingham & Midland Institute to hear Professor Danny Dorling talk about income inequality on Wednesday 9th May at 6.30pm.   It will be a great opportunity to understand how income inequality affects us all and ask questions.  The evening is free; however because of this, places are limited so please do register here to reserve your place.

A highly acclaimed expert in the study of social inequalities,  Professor Danny Dorling has researched and written extensively about issues relating to inequality.  In his hard-hitting book, Injustice, Professor Dorling detailed the five new tenets of injustice: ‘elitism is efficient’; ‘exclusion is necessary’; ‘prejudice is natural’; ‘greed is good’ and ‘despair is inevitable’.  His forensic examination of each of these demonstrates how they underpin injustice in the modern world and why, if left unchallenged, these ideas continue to propagate.

His most recent book, No-Nonsense Guide to Inequality, is a wonderful exposé of how a more equal society is better for everyone.   For more about Danny Dorling, please visit his website.

We would be most grateful if you’d kindly spread the word too, please.

Leaflet Advertising Danny Dorling's forthcoming Talk

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Daily Mail – “Pay gap between highest and lowest earners growing faster in Britain than any of the world’s richest countries”

“The pay divide in Britain between the highest and lowest earners has grown more sharply than in any other high-income country since 1975, a report revealed today.

The richest 1 per cent have seen their share of total UK income rocket from 7.1 per cent in 1970 to 14.3 per cent in 2005.

Just prior to the global recession, the top 0.1 per cent of top earners accounted for 5 per cent of total pre-tax income.”

Read more: http://www.dailymail.co.uk/news/article-2070099/Pay-gap-growing-faster-UK-worlds-richest-countries.html#ixzz1fwpv5p1r

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You’re better off in a more equal society (Part 1)

When talking to people about why tackling income inequality matters, one of the most common objections I have found is the assumption that reducing income inequality means making everyone poorer. The challenge is normally worded “if we make the poor poorer, and the rich poorer still, so reducing income inequality – how can this be better for everyone?”

Firstly, it’s worth pointing out that this objection tackles an artificial problem. In reality, as economies grow it is possible to spread the benefits of that growth without making anyone poorer. Yet, what we have seen over the past 30 years is exactly the opposite – with the richest getting richer and middle incomes unaffected or in decline. The Resolution Foundation published in a report, Missing Out1, in July 2011, which highlighted that median wages in the UK were stagnant through the ‘boom’ period from 2003 to 2008 despite GDP growth of 11 per cent in the period. They also looked over a 30 year period at the growing income inequality:

“In 1977, of every £100 of value generated by the UK economy, £16 went to the bottom half of workers in wages; by 2010 that figure had fallen to £12, a 26 per cent decline. Indeed, the trend may be even starker: inclusion of bonus payments reduces the bottom half’s share to just £10 in 2010.”

Missing Out, Exec Summary, page 2.

Some of this decline in wages is due to greater proportion going to shareholders than to wages, and greater percentages going to social contributions (e.g. NI and pensions), but these account for only a third of the decline. The vast majority of this decline is due to growing income inequality –with the top 10% getting the same share of the growth as the whole bottom 50% put together. Over the past 30 years, the top 1 % of earners have seen an increase of 50% in their share of the growth of the economy.

The truth is that growth can be more evenly spread to benefit everyone without making anyone any poorer. The irony is that as the IMF have recently highlighted2 income inequality may well hamper sustained economic growth and that the recent economic crash may be due to growing inequality – so income inequality in itself may well be making us all poorer.

I, also, think it is worth dwelling though, on the artificial problem itself, because I do believe that “were the poor to get poorer, and the rich poorer still, so reducing income inequality, everyone would still be better off”. Firstly, I think it is also worth remembering that if we are to follow the law of supply and demand – if everyone was to become poorer, that essential goods and services should also become cheaper to compensate and peoples’ quality of life would not be affected proportionately. So why does income equality matter in this scenario, then?

Human beings are instinctively social animals, and we compare ourselves to others. So as income inequality grows, the goods we need to buy and own to be seen as ‘successful’ or gain ‘respect’ becomes greater as those above us gain greater wealth. This has been most clearly outlined by Professor Robert Frank, an economist from Cornell University, in his book, Falling Behind: How rising inequality harms the middle class3, when people are asked if they would prefer a 4,000ft2 house in an area of 6,000ft2 mansions, or a 3,000ft2 house in an area of 2,000 ft2 starter homes – most people chose the smaller house, but to be better off in comparison with their neighbours. People want what other people have. As Joseph Stiglitz, Nobel Prize winning economist writes: “Trickle-down economics may be a chimera, but trickle-down behaviourism is very real”4.

Therefore, growing income inequality promotes unsustainable consumerism, as we all compare ourselves to those who are growing richer (or appear to be), affecting everyone all the way up the income scale. This promotes the debt spiral. It has been found that the debt/income ratio rose from 45 in 1980 to 91.1 in 1997 and to 156.4 in 20075 ; in the same period, the UK’s Gini co-efficient, as a measure of income inequality has gone from 0.26 to 0.36, with the UK becoming one of the most unequal, developed countries in the world. So even the wealthy 10% will in many cases be trying to maintain a life-style beyond their means on increased debt, reinforcing the pressures of income inequality.

So reducing income inequality – reducing it to the level of Sweden, for example – would have dramatic impact, even if people are getting richer (or poorer) in the process. The reality is, with the right Government policies in place and commitment from businesses, this could be achieved so everyone experiences growth in a more balanced manner. The past 30 years have seen income inequality expanding rapidly in the UK, and urgent action is required to reverse the trend, so we can encourage sustained growth over the next 30 years.

Post written by Chris Burgess, a member of Equality West Midlands.

References

  1. Resolution Foundation, Missing Out Report: http://www.resolutionfoundation.org/media/media/downloads/Missing_Out.pdf
  2. http://www.imf.org/external/pubs/ft/fandd/2011/09/Berg.htm
  3. Frank, R. H. (2007). Falling behind: How rising inequality harms the middle class. Berkeley: University of California Press.
  4. Stiglitz, J. (2011, May). Of the 1%, by the 1% for the 1%. Vanity Fair
  5. Credit Action. (2011). Debt facts and figures – compiled October 2011. London: Credit Action.
  6. Key Ideas: http://www.neweconomics.org/publications/ten-reasons-to-care-about-economic-inequality
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Richard Wilkinson’s TED Talk on Income Inequality from July

Anyone who missed our launch event on 5th October might enjoy Richard Wilkinson’s TED talk from July this year.  It explains the key theme of ‘The Spirit Level’, with some of the supporting data on global income inequality among developed countries.

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A third of children in Birmingham living in poverty.

Ladywood, BirminghamThe Birmingham Mail this week had an article on the work of the Princes Trust in one of the most deprived areas of the country, Ladywood in Birmingham.  It highlights that growing inequality is creating a ‘youth underclass’, without skills or aspiration they need to free themselves from poverty.

MORE than one in three children in Birmingham are living in poverty with thousands believing they will never achieve their goals in life.

A new, disturbing report from youth charity The Prince’s Trust revealed that in Ladywood alone around 49 per cent of youngsters lived in poverty – one of the highest figures in the UK.

It highlighted the growing gap between the city’s richest and poorest with one in ten young people believing they will “end up on benefits for at least part of their lives” and 17 per cent feeling that “few” or “none” of their goals in life were achievable with those growing up in poverty more likely to feel that way.

Kathy Williams, regional director for The Prince’s Trust, said: “The aspiration gap between Birmingham’s richest and poorest young people is creating a ‘youth underclass’ – who tragically feel they have a bleak future.

“We simply cannot ignore this inequality. The Prince’s Trust is helping the city’s most disadvantaged young people build the skills, self-esteem and aspirations they need to free themselves from a life of poverty and unemployment.”

The full Birmingham Mail article can be read here.  The Prince’s Trust website can be found here.
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The Group

The Equality West Midlands group is affiliated to The Equality Trust.  The aims of the group are to promote a variety of programmes to reduce income inequality through public and political awareness. The group wishes to foster:

  • a widespread understanding of the harm caused by income inequality
  • public support for policy measures to reduce income inequality
  • the political commitment to implementing such policy measures

We are a non-partisan group and call on all political parties to prioritise this issue.

Some of the most deprived areas of the United Kingdom are in the West Midlands. The Group holds regular meeting to help share awareness of the impact of income inequality and the social harms which it generates, both on a national and local level.

Posted in Income Inequality