An anxious Osborne

The British Chancellor came onto the BBC Radio 4 'Today' programme to promote the idea that his coalition government's economic policy was vindicated by the latest report from the Independent Institute of Fiscal Studies (IFS.) The IFS report apparently told us that 'median incomes' in the UK had now risen to their pre 2008 level. Osborne then lied that the report had also indicated that there was a reduction in income inequality. It actually says that, taking in to account both the rise in the poor's benefits in 2008 and 09 after the crash, which slightly decreased the inequality of income AND the rise in food and energy prices subsequently, which increased the income equality gap again, inequality of income remained roughly the same as in 2008.  Additionally, Osborne had nothing to say about IFS's Director Paul Johnston's comment from the same report that he had made previously on the same programme;
'Working age households' incomes' he noted 'are still less than they were prior to 2008.' If you are working, the chances are you are still at 2007 levels. Osborne was not asked about his plans for a further, deeper round of cuts should his party get back to power.

Nevertheless it is worth spending a little more time, just on the equality issue in the UK. The Chancellor's false claim about the IFS report shows some nervousness among the UK elites in this regard.

The whole political Internet is familiar with Oxfam's briefing on inequality put out for the Davros Conference earlier this year, that by 2016 the top 1% in the world will own more of the world's wealth than the bottom 50%. Even 'Fortune' (4 March 2015) the US mag promoting wealth, adds
'The richest 80 people on the planet doubled their cash wealth between 2009 and 2014. They now have as much as the bottom half of humanity put together. Whereas five years ago, it needed the 388 richest billionaires to rival the spending power of the poorest half, by 2014 that number had fallen to just 80.'

What about Britain. What is making Osborne anxious?

On the 15 May 2014 the Office for National Statistics (ONS) reported that 1% of Brits already owned as much as the bottom 55%.  (The measure was made in property, pensions and assets.) The Poverty and Social Exclusion Website, an independent research tool, noted on 17 March 2014 that 5 families were 'worth' more than the total assets and income of the bottom 20% in the UK. Credit Suisse recorded in its Global Wealth Report for 2014 that
'The UK is the only country to record rising wealth inequality from 2000 to 2014...Wealth inequality has risen by 4 times faster in the 7 years after the crash compared with the 7 years before. Wealth inequality' the report goes on, 'rose under Labour; it rose faster under the Coalition.' It concludes ' The rich in the UK are becoming richer faster than ever.'

A recent article (John Nickson 19 May 2014) in the Huffington Post is well referenced and worth quoting at some length.
'Wealth is news. the Sunday Times Rich List tells us the top 1000 have doubled their wealth in five years, the UK has more billionaires per head of population than any other country and that London is the world capital of the super rich...
According to the ONS, the number of millionaires has risen by 50% in four years despite the financial crisis. 9% of households have assets worth more than £1million...
The bad news is that growing inequality is approaching pre first world war levels. The richest 10% in Britain own 44% of total national wealth, five times more than the poorest 50% of the population who collectively own 9%. The figures for share of national income are even more startling. The share going to those on the lower half of earnings has fallen by 25% since the 1970's (OECD) whilst the slice going to the top 1% has increased by 50%. The most recent figures from HM Revenue and Customs confirm that the return of economic growth in the last year has overwhelmingly benefited the top 1% of earners.'

Returning to the IFS report, it puzzles over a problem that many mainstream economists and politicians have also worried at. Why is productivity (of labour) still so low in Britain? There are many suggestions on offer to explain this apparent paradox - low grade jobs; lack of government incentive; etc. What however turns out to be the most obvious and glaring reason for Britain's dismal record on productivity is the ingrained investment 'strike' by big capital in the UK. That 'strike' is intimately linked to the UK's horrific concentration of wealth which is constructed completely outside of the creation of new tecniques and new means of production. We will return to this issue, and also the direct and indirect effects of this economic gangrene for our political system. Suffice it here to say that inequality in Britain is a scandal and a disaster and getting worse.