I wrote here earlier this week about what we reckon Jeremy Corbyn should be lobbying for if he really wants to have a go at reducing income inequality. But I do think that it is worth us pointing out here (again) that income inequality in the UK has not been rising for years.
You might think it is too high but it is falling, not rising. As the ONS pointed out recently, last year, inequality in the UK as measured by the Gini coefficient fell to its lowest since 1986.
Since the financial crisis, the incomes of the poorest fifth of households in the UK has risen by over 13% in real terms and that of the best paid fifth has fallen 3.4%. Yes, the poorest have gained the most and the richest lost the most not the other way around.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
There are problems within this seeming success. The first is that a lot of it is about pensions: the triple lock has meant that the real gains have gone to pensioners rather than to working people.
And the second is that the changes are mostly about redistribution via the welfare state. Taxing the top more. Taxing the working poor less (the rise in the personal allowance) and handing out lots of benefits along the way.
It's good that this works. But it would be much better if it didn't have to if wages were rising faster at the bottom for example and if there was less excess at the very top too.
However, for that we are going to need to encourage capitalism to do its job better, rather than just demanding, Corbyn style, the continual divvying up of a static cake.
That means serious productivity gains on one hand and some serious shareholder action on the other (see the orginal article!).
-
Beating inflation takes more luck than skill – but are we about to get lucky?Opinion The US Federal Reserve managed to beat inflation in the 1980s. But much of that was down to pure luck. Thankfully, says Merryn Somerset Webb, the Bank of England may be about to get lucky.
-
Rishi Sunak can’t fix all our problems – so why try?Opinion Rishi Sunak’s Spring Statement is an attempt to plaster over problems the chancellor can’t fix. So should he even bother trying, asks Merryn Somerset Webb?
-
Young people are becoming a scarce resource – we should value them more highlyOpinion In the last two years adults have been bizarrely unkind to children and young people. That doesn’t bode well for the future, says Merryn Somerset Webb.
-
Ask for a pay rise – everyone else isOpinion As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why you should do that too.
-
Why central banks should stick to controlling inflationOpinion The world’s central bankers are stepping out of their traditional roles and becoming much more political. That’s a mistake, says Merryn Somerset Webb.
-
How St Ives became St Tropez as the recovery drives prices sky highOpinion Merryn Somerset Webb finds herself at the epicentre of Britain’s V-shaped recovery as pent-up demand flows straight into Cornwall’s restaurants and beaches.
-
The real problem of Universal Basic Income (UBI)Merryn's Blog April employment numbers showed 75 per cent fewer people in the US returned to employment compared to expectations. Merryn Somerset-Webb explains how excessive government support is causing a shortage of labour.
-
Why an ageing population is not necessarily the disaster many people think it isOpinion We’ve got used to the idea that an ageing population is a bad thing. But that’s not necessarily true, says Merryn Somerset Webb.
