A fair share

Peter Mandelson’s famous statement that Labour is “intensely relaxed about people getting filthy rich” has come back to haunt the party and will no doubt be wheeled out again in the coming election campaign.

A new report notes that 13 years of Labour rule have done little to reverse the huge growth in the gap between rich and poor that developed under Margaret Thatcher’s Tory government in the 1980s.

The National Equality Panel (commissioned by Harriet Harman MP) published its report 'An Anatomy of Economic Equality in the UK' in January. It contains some worrying facts and figures about the distribution of wealth in the UK, with the panel finding “deep-seated and systematic differences in economic outcomes” between and within social groups.

The report contains startling statistics about the growing gaps in earning and income inequality and their scale compared with other developed nations. It also shows a persistent gender gap, with women being on the whole better qualified than men up to the age of 44, but with a median hourly pay of 21% less than men. It points to continuing ethnic inequalities, finding that Pakistani and Bangladeshi Muslim men and Black African Christian men are paid 13-21% lower than White British Christian men with the same job and qualifications. And it reveals that the richest 10% of UK population has more than 100 times the total household wealth of the poorest 10%.

Why does all this matter? Mandelson qualified his statement by saying Labour was relaxed about the rich “as long as they pay their taxes”. But the figures in the NEP report debunk the myth of ‘trickle-down economics’: the idea that if those at the top of the pile become ‘filthy rich’ those further down will also reap the benefits. Instead what it shows is that as the rich become richer, the wealth remains largely at the top and the rungs on the social ladder move further apart.

This has important consequences for society. In their 2009 book The Spirit Level(out this month in paperback) authors Richard Wilkinson and Kate Pickett have made a compelling case that more equal societies fare better than more unequal ones. Across a wide variety of indicators of social wellbeing including physical and mental health, obesity, violent crime rates and teenage births, they show that, once a country has reached the level of GDP which lifts it out of poverty, what matters is not how much wealth there is in that country but how it is distributed.

There is a clear parallel with the depletion of our environmental resources. Just as in the UK we see wealth concentrated in a small section of society, so on a global level the rich use far more than their fair share of available environmental resources such as carbon, water, and food. We are only beginning to start thinking – largely through the climate debate – what the long-term implications of that unfair distribution might be, and how that will impact on all of us.

At Copenhagen this theme was taken up by the G77 nations. But once again we saw world leaders seemingly ‘intensely relaxed’ about attaching more importance to protecting their national economies than the global need to reduce carbon emissions dramatically, for the benefit of all.

If we are to start thinking about truly sustainable development, where the needs of the present are met without compromising the ability of future generations to meet their own needs, then we need to start taking these issues of distribution more seriously. We need to let the idea of trickle-down economics go for good. That requires a level of bravery and leadership that we haven’t seen in our politicians for many decades. And more importantly support from an enlightened public. Redistribution has fallen out of favour in recent decades - the question is how we’re going to bring it back?