Inequality and the 1%

1%A recently published book by Danny Dorling entitled “Inequality and the 1%” explains how the rich have found new ways of protecting their wealth whilst everyone else has suffered the penalties of austerity. But inequality is more than just economics. Being born outside the 1% has a dramatic impact on a person’s potential: reducing life expectancy, limiting education and work prospects, and even affecting mental health. Below is an extract.

In 2011/12, the average couple without children in the UK took home £442 a week from earnings just under £23,000 – see Fig 1.1 below. In the middle of the income distribution, people pay as much tax as they tend to receive in benefits. The poorest tenth of households in the UK have almost no income from earnings of from a private pension (these figures include households with only pensioners). They rely entirely on the state to survive. Taking into account benefits, a couple who both qualify for state pensions will receive about £222 a week if the £1.75 pension credit they are entitled to is also claimed. These are the best-off childless couples among the poorest 10 per cent of the households in Britain, living on £11,500 a year. As Fig 1.1 shows, they survive on about a fifth of the weekly earnings of an average childless couple in the best-off 10 per cent.

UK 1%

US income gains since 1979

Here is an interesting graph from Paul Solman of PBS. The top earners in the US have disproportionately been rewarded from the last 30 years of right wing free-market policies – starting in the early 1980’s with the ideologies of UK Prime Minister Margaret Thatcher and US President Ronald Reagan. However the significant increase from 2002 can in part be due to deregulation of financial markets and a very loose monetary policy by the US Fed. Also, in 1999 the Gramm–Leach–Bliley Act effectively removed the separation that previously existed between investment banking which issued securities and commercial banks which accepted deposits – the Glass Stegal Act of 1933. The deregulation also removed conflict of interest prohibitions between investment bankers serving as officers of commercial banks.