The similar lives of the rich and the not so rich

More on inequality. In my last blog post, I mentioned a talk by John Lanchester at the Edinburgh book festival in which he discussed the subject. During the Q&A, there was a conversation about rage – how it would soon grip the UK and force change. I doubt it.

That’s first because income inequality isn’t rising, its falling. But it is also because the lives of the not so rich are no longer that different to those of the rich.

Irwin Stelzer picked up this theme in The Sunday Times a few weeks ago. The gap he says between the “living standards of a Harrods shopper and a Harrods shop girl” is a million times narrower than it was in, say, the Victorian times the inequality fanatics like to harp back to.

This is, as Stelzer says, partly a result of “the expanded availability of health care, education and an expanded range of public goods”, and partly down to “rapid innovation”.

Consider clothes. They are so cheap and of such good quality these days that they homogenise the appearance of all save the very, very poor. Note Rachel Johnson posing in a Lidl jacket on her doorstep in Notting Hill for a newspaper article yesterday. If you don’t look too closely, she says, it passes for Prada. Add cheap flights and technology into that.

Almost everyone has access to televisions, smart phones, music and video on demand and also has access to the odd flight to Ibiza.

Some people will be listening to Spotify-streamed music on their yachts in Ibiza and some will be listening to it on the terrace of a cheap hotel. But everyone has the ability to wear similar clothes, travel to similar places, talk for hours to family across continents using similar technology and use similar forms of entertainment.

You can argue about whether the financial gap between the rich and poor is widening or not (we would say the wealth gap is and the income gap is not), but on one thing we can agree with Irwin Stelzer: measure it in terms of the quality and quantity of services to all and “the gap in living standards is certainly narrowing.” That doesn’t leave as much to rage about as Lanchester might think.

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27 Responses

  1. 28/08/2014, Angela wrote

    Another thing. Medical treatment. If you need emergency treatment in the UK, you will get the best fastest treatment available, in the same hospital, often on the same ward. No matter your income.
    It doesn’t half bring you down to earth.

  2. 28/08/2014, GFL wrote

    If you take out the bottom 20% and top 5% the remaining 75% have fairly similar lives.

    Yes, the top end of that bracket drives a better car, stays in a better hotel on holiday, has a bigger house and has a picture of a man playing polo on his T-shirt. But broadly speaking everyone in that bracket does the same thing from day to day.

    Improvements in technology (and globalization) has reduced the cost of living so much, pretty much anyone can afford the basics and some.

    So when looking at inequality, a measurement of quality of life is a lot more useful and inequality in this domain in reducing.

  3. 28/08/2014, GFL wrote

    The biggest threat to inequality is technological advancement slowing down or we hit some kind of resource limit, which technology cannot quickly, easily or cheaply overcome.

  4. 28/08/2014, mr clyde wrote

    Similar lives except for the luxury of choice.

  5. 28/08/2014, Boris MacDonut wrote

    There is a lot more to inequality than just wealth and incomes. There is inequality in opportunity particularly access to high end education and jobs. Many are effectively excluded. Inequality in life expectancy and health. But really it is inequality in choice.
    When one holidays at Butlins and the other on a Yacht, bBoth have had a holiday, but usually the yacht owner has a wide choice the other does not.

  6. 28/08/2014, Boris MacDonut wrote

    Income inequality has been rising since 1978. Wealth inequality is back to the levels of 1919. To say the lives of the rich and “not so rich” (does that include the poor?) are not so different is patently ridiculous. Yes a £5,000 bottle of wine and a £5 bottle are both wine. Yes reading a textbbok at Eton and reading a textbook at scumbag secondary is still reading a book. Yes driving a Bugatti and driving a ten year old Clio is stil driving. But really.

  7. 29/08/2014, dan w wrote

    interested in the suggestion that income inequality is falling. what is the evidence for that?

    • 29/08/2014, Boris MacDonut wrote

      Same here Dan. I think Merryn means take home income aftert ax and benefits has slightly narrowed except for the bottom 10% and the top 2%.But inco0me inequality is burgeoning.

  8. 31/08/2014, Tyler Durden wrote

    I don’t get where income inequality is falling. It has certainly accelerated over the past six years or so since the advent of the so called financial crisis, and the net effect is that wealth has flowed to the wealthiest. The gap in pay between executives and their workers is pretty much at the highest level it has ever been.

    Claiming that everyone can listen to Spotify on their iPhones is one of the biggest fallacies there is to tell us there is no problem here. If you have private medical care you will get treated far faster than on the NHS and you will never be told that a treatment is unavailable or too costly. Lest we forget, the NHS is living off an awful lot of government borrowing and it is not a national insurance scheme in the way that it should be.

    • 01/09/2014, Clive wrote

      “If you have private medical care … you will never be told that a treatment is unavailable or too costly”

      That’s not true. When you buy private medical care, most insurers offer levels of cover. Certainly if you buy the minimum cover, there will be restrictions on what you receive.

      • 01/09/2014, Tyler Durden wrote

        If you can afford it you can get it. That’s not what the NHS and a truly national health insurance scheme was intended to be.

        • 01/09/2014, Clive wrote

          The way I view the NHS is that it ensures everybody has access to medical care that’s free at the point of delivery (if we skip over prescription charges), NOT that everybody is obliged to use it. The latter, insisting that people can only access the medical care that the state chooses to provide, is not consistent with a free society.

          Same goes for state education. The state can insist that parents educate their children (that’s a good thing), not that the parents can only access the education the state chooses to provide.

  9. 31/08/2014, Boris MacDonut wrote

    Tyler. I quite agree. It would be like 100 years ago saying because anyone can go on the Titanis, third class or deluxe sea view we are all the same. I think Merryn needs to explain where the evidence is for income inequality falling (and not just citing the 45% tax rate on a handful of rich). Wealth inequality is burgeoning all over the World.

  10. 31/08/2014, GFL wrote

    Of course the better off you are the more freedom you have, no one is denying that – if this wasn’t the case money wouldn’t have any value.

    But no one can deny the quality of life difference between the top and the bottom is closing and between the middle 60-70% or so there is little difference. Most people have cars, most people can afford holidays abroad, most people can afford the internet, etc. Technology is reducing the gap year-by-year.

    The NHS issue is a different topic all together, if the state didn’t provide health care most people would get private insurance. The reason most people don’t have BUPA cover is because they don’t want to pay for health care twice.

    • 01/09/2014, Boris MacDonut wrote

      GFL. How many own 5 cars? How many have a yacht? How many have staff? How many pay £50,000 for 2 days grouse shooting? How many drip with diamonds? How many spend £100,000+ on their daughter’s wedding?

  11. 01/09/2014, Greg wrote

    I think this article is inaccurate in many respects.

    Yes, people can buy cheap clothes, cheap cars, get cheap flights and stay in cheap hotels but there are many more who are struggling, don’t own a home, a car, buy new clothes or go on any holiday – it’s as if these people are invisible.

    Yes, generally people have a better standard of living than in Victorian times and technology becomes cheaper due to innovation and obsolescence over time, meaning that second hand technology is cheaper, but people are exploited in ‘sweat shops’ in order to make cheap clothes and technology. In a global economy we should consider global poverty as well as that at home.

    So you have to look beyond what you might see – appearances are deceiving.

  12. 02/09/2014, Rosco wrote

    Merryn, do you know anyone who earns the national average of c.£26k (or less) in London or the South East, with its rising housing and travel costs and spiraling food prices? I doubt it.

    If you did you’d understand that a lot of people are effectively part of the ‘working-broke’: they’re cutting back on food purchases, have no assets (apart from their smartphone) and are up to their eyeballs in credit card debt, unlike the woman in her Lidl jacket in Notting Hill.

    Credit card debt is the only reason people on average incomes can afford some kind of superficial material equivalence with their richer peers. If people had to pay in cash, you’d soon see the real gap between the rich and poor.

    A silent majority of people out there are increasingly angry. They haven’t made their views heard yet because they are trying to retain some semblance of dignity as they get blasted into financial oblivion. When Credit Crunch 2 hits, it will manifest itself.

    • 03/09/2014, Boris MacDonut wrote

      Well said Rosco. Much truth in that. I fear that Merryn and many of the arbiters of taste and trend have not a clue how the 90% live.

      • 04/09/2014, Clive wrote

        The richest 60-70% of those hard-done by 90% must be the same people I see packing the airports and spending a fortune on their houses.

        I suspect for those 60-70%, you could double their take home pay and they would still have little free cash, just more holidays, better houses, newer cars, bigger TVs. Let’s face it, a lot of people try to live to the limit of their expenses, and often beyond them.

        • 04/09/2014, Boris MacDonut wrote

          Clive. You poijt very neatly to capitalisms big failing. The failure to provide sufficient for the majority to assuage their modest dreams. Technological and financial gains over the past 30 years have all been snaffled by the 1 or 2%, while the average Joe has had no pay rise for 6 years.

          • 04/09/2014, Clive wrote

            Boris

            I think I’ve had one minor pay rise in the last 5-6 years and drive a car that’s more than 10 years old, but I live within my means, deliberately not making use of all the credit that I’m sure I could lay my hands on.

            However, I don’t blame anybody for the fact I’m not in “easy street” (not suggesting that YOU blame people, simply that some do). My life is OK, in fact by world standards I have a great life.

            • 04/09/2014, Boris MacDonut wrote

              Clive. Of course we in the west have an excellent life. But the fact is the 1% have 26% of all wealth. If they had 13% they would still be fabulously wealthy but the rest of us would have nearly 20% more.

              • 05/09/2014, Clive wrote

                Boris

                My guess would be that if you took your argument out ‘on the street’ and said to the average Joe/Jane “heh, that guy has 100 times more wealth than you, would you like us to take 1/2 his wealth and divide it out amongst the common folk ?”, you’d probably get a resounding “Yes !”.

                Try the same argument as “heh, your lifestyle is 100 times better than somebody living in the poorest parts of India, Africa, Asia, would you like us to take 1/2 your wealth and divide it out amongst the poor there ?”, you’d probably get a resounding “No !”.

                (You have only to read the newspapers to see articles time and again complaining about how much this country gives in charity to other countries to see this in action)

                I don’t think people are interested in equality, they’re just interested in trying to get something for nothing.

  13. 03/09/2014, GFL wrote

    Very few – not sure what point you are making.

    Would you prefer to live in a country where everyone is equally poor?

    • 04/09/2014, Boris MacDonut wrote

      My point is the quality of life is not narrowing. The 1% are pulling ever further away, with ever growing demands for expensive frippery, while the majority languish. My preference is to tax income above £500,000pa at 70% and wealth of over £5 million at 3% per year. A clear signal needs to be sent that the UK does not tolerate greed.

      • 05/09/2014, GFL wrote

        Of course it’s narrowing, no one is going up chimneys any more, pretty much no one is starving anymore, most people can afford meat every day, etc. Yes these are extreme examples, but it gives an indication of the direction the ‘average’ man’s life is moving in. My dad started working when he was 14 or 15 to help support the family – which 14 year old is supporting his family now days?

        As Clive described above, this is less about equality and more about wanting to take more of other people’s wealth. The life style difference between yourself and someone fairly poor in India is A LOT bigger than between you and a millionaire. I suggest you stop being so greedy and give half of what you’ve got.

        This being said, I’m completely against how some people have made their wealth (particularly in banking), bailouts and a system that takes money from the bottom and distributes it to the top. But this is a different topic all together about the rotten financial-system and nothing to do with taxation.

  14. 03/09/2014, GFL wrote

    That comment was in response to Boris – still can’t get used to this new format, no idea why is was added to the bottom

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