The 1% that sparked the anger of Occupy and that has been the focus of so much political rage, is doing extremely well out of some dark economic times. The idea of trickle-down economics, that the rich getting richer will trickle down to benefit everyone, is a failure and doesn't explain our economy at all. Oxfam released a report recently which said that the number of billionaires has more than doubled since the financial crisis. Even though Occupy has faded since they helped make 'The Protestor' Time Magazine's Person Of The Year in 2011, the 1% they fought against has gone from strength to strength. They suck in money and growth like a black hole.
You might think that logically a faltering economy, only just recovering from recession, wouldn't help the richest few in society more than the rest of us, but you would be wrong. In a study of the US, the World Bank, found that the income growth of the poor is damaged by inequality, the same factor that helps the income of the rich grow. Inequality is not a static state, it perpetuates itself; inequality doesn't only localise money into the hands of the few, it does the same for growth.
The nature of inequality is that it fuels inequality, which then fuels inequality again. The High Pay Centre recently released research on performance related pay. They found that the 'performance related' part is broken and the emphasis is simply on pay. Their deputy director, Luke Hildyard, described those at the top as being the beneficiaries of a 'self-enriching racket'. It looks like we can apply that rule not only to the systems of pay but across the board for the richest few. Thomas Piketty, in his bestselling book, Capital In The 21st Century, meticulously set out how the privilege of wealth leads to a whole stream of economic success of its own, with asset growth far outstripping that of wages. The economy is set up to benefit those who don't need it.
Despite all the noise being made about the human cost of such inequality and the economic damage it causes, we are in danger of seeing this inequality becoming institutionalised. The public/state school debate, which has been fought for many years, still stands as an example of elitism in the UK today. Research shows that even if someone educated at a state school and a public school hold the same job, the one who went to public school will be paid more to the tune of £1,500 a year.
The New Economics Foundation has launched the awkwardly named 'Real Britain Index' to combat the inequities of current price measures. The Consumer Price Index used by the government does not the show the true impact of living costs upon the poorest 50% in our society, instead underestimating the costs, to the detriment of understanding what on earth is going on with our economy.
Inequality is not a niche issue relegated only to dusty economists. The think tank Class recently released a polling report which shows that large portions of the population believe that the country is less fair than it used to be and a majority believe that there is a big gap in pay and it is having a negative effect on British society. When The Spirt Level was published in 2009, party leaders were quick to back it, to prove that they want to fight inequality. 5 years later, little has changed politically. The public are worried about inequality and for inequality to be ignored by the main parties will put politicians on the back foot in the very near future. After a brief spell of 'responsible capitalism' being on the agenda in 2012, now is the time for politicians to put their money where their mouth is and act.
The idea of trickle-down economics, the zeitgeist of monetarism and the bug-bear of the left is dead as an idea. It's nonsensical and it never worked. What we are seeing happening right now is an upward torrent of wealth. Since Oxfam's report earlier this year, which said that the five richest families (87 people) in the world are wealthier than the entire bottom 20% of the population, the number with that wealth is now 67, after only a year. At a time when the social mobility is crashing and large numbers of us are struggling to break out of low pay, this gross and broken inequality seems all the more ridiculous. If we don't stop this, and stop it soon, just imagine what how rich the 1% will be, and how fucked the rest of us are.Suggest a correction