Wednesday, July 18, 2007

Back to a Victorian Age?

Two new reports on inequality in rich countries show just how much the income gap has been growing in recent years and decades. The first, from the IMF, looks at Europe, the United States and Canada. It concludes that for those countries that started with the greatest income inequality in the late 1970s – notably the U.S. and Britain -- the gap has grown the fastest. But in those places that started off relatively more equal, the gap has grown more modestly - and in some cases such as the Netherlands, France and Denmark, the gap between rich and poor has even narrowed.

The second, from the UK-based Joseph Rowntree foundation, focuses on Britain. “The gap between rich and poor is at a 40-year high and is leading to an increasing segregation in British society that is pulling the middle class apart,” one report from Bloomberg news described it. A leader article in the Guardian newspaper goes further, noting the role of taxation:

Out of sight, out of mind. That is the predicament of Britain's poor, at least if yesterday's report from the Joseph Rowntree Foundation is right. It charts a widening economic chasm between communities.

Economic apartheid works to entrench low expectations among poorer communities, undermining the social mobility that politicians of all stripes have been arguing is essential to ensure a strong economy, with the best people in the right jobs.

The rich are always with us - and they are richer now than ever. Rowntree finds that since 2000 the wealthiest localities have seen annual incomes rise fastest. Runaway City pay has played a part here, as has the government's failure to shift the tax burden significantly on to those best able to bear it.

Another, more colourful Guardian story pointed us backwards, to the time of Queen Victoria, with a headline about Urban Britain Heading for “Victorian” Levels of Inequality. “Beneath the helipads,” it said, “there lurks a growing cityscape of poverty and exploitation. . . Labour's clause 4 commits the party to putting wealth "in the hands of the many, not the few". Yet the economic privileges of the few look as entrenched as ever.”


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