A few years ago, no-one paid much attention to rising inequality. But now we are living with ever-faltering economic recovery, stitched up coalition government and make-do-and-mend policy making, inequality is once more in vogue
A few years ago, no-one paid much attention to rising inequality. Who cares if the rich are getting richer, the argument went, if the poor are doing better too? But now we are living with ever-faltering economic recovery, stitched-up coalition government and make-do-and-mend policy-making, inequality is once more in vogue.
When Spear’s hosted a debate on the new global aristocracy at Hay-on-Wye that pitched New Statesman firebrand Laurie Penny against hedge fund manager Jonathan Bailey, expected sparks leapt into the audience. The tension reached theatrical heights when Bailey said that Sunday Times rich-listers were not really rich, and that only those worth over £1 billion ought to be counted.
It was in part a sign of how little Brits know about ‘how the other half lives’. When the High Pay Commission asked people how much FTSE 100 CEOs earned, only 9 per cent correctly identified their average salary at £4 million, and 4 per cent believed they earned £50,000.
It also shows that for those interested only in rich-bashing, the wealthy are an indefinable and slippery target — where do you draw the line between the rich and the rest? Many popular preconceptions about the new global rich are wrong. According to CapGemini only 16 per cent of HNWs inherited their wealth, while 47 per cent are entrepreneurs — they owe their wealth to hard work and great ideas, ideas that may have transformed our lives for the better.
The politics of envy is not a rational basis for change, but inequality does undermine social cohesion, breed resentment and, according to some economists, slow down economic growth. An IMF study released in April found that growth spells are shorter in countries with less equal income distribution.
So how should we respond to findings such as this? First, by avoiding jumping to easy conclusions — can we be sure, for instance, that inequality is a cause and not a symptom of economic malaise? What is a healthy balance between rewarding hard work and limiting inequality? When does inequality become more important than fighting poverty, or promoting social mobility?
But also, perhaps now more than ever, it is time to acknowledge that wealth brings influence and responsibility, two aspects that Spear’s never shies away from recognising.