Beyond left and right on inequality

A short digression from 21st century enlightenment on to the topic of inequality.

Last week I spoke at a kind of political cabaret at the Ivy Club. It was great fun, although I fear I was a bit churlish. I had done a turn for the Rory Bremner election tour the previous night in Rochester so I’d had enough performance politics for one week. Also, as you might expect in such a venue, the audience were all obviously pretty well-off and (despite my own class status) I have never liked the middle classes in gangs.

Echoing a critique I have heard from other people on the right, a number of the audience and the panel criticised Labour’s record on inequality. The implication was that as Labour’s attempts at redistribution and public investment had failed to reduce inequality we should abandon them in favour of a less statist strategy.

Labour’s record on inequality is also attacked from the left. Here the critique is that New Labour has been too timid and has squandered the opportunity to fundamentally shift inequality in the UK (Stein Ringen eloquently makes the case on the RSA website). This fits the left’s general tendency towards pessimism and the betrayal myth (something we will see a whole lot more of if Labour loses the election).

Pondering this I was very taken by a post by Tim Worstall from the Adam Smith Institute. Tim critiques the recent report form the National Equality Panel which was chaired by Professor John Hills of LSE (someone whose work I generally admire). Tim convincingly argues that the Hills report overstates aspects of inequality, particularly by understating the impact of benefits in kind (public services) and the long term value of benefit entitlements (which Worstall says can be seen as assets just like the houses and savings of the rich).

My point is not to get into the why’s and wherefore’s of Tim’s argument (although if anyone wants to pass this on to John Hills I would be fascinated to read his reply) but to notice that his argument suggests inter alia that Labour has done better than some argue in promoting greater social equality.

There is a perfectly decent Thatcherite argument that the side effects of attempts to reduce inequality (larger state, moral hazards, fiscal deficits etc) outweigh the benefits, and I suspect this is what many at the Adam Smith Institute believe. So to argue that Labour has done OK on equality isn’t to say that Labour has done the right thing (nor less than it should be re-elected). But it is interesting that both left and right appear to find it in their interests to spread pessimism about the capacity of traditional incremental social democratic interventions to make a difference to fairness in society.

As I said last week, the UK has over the last fifteen years actually fared better than most other developed countries in counteracting the polarising effect on labour markets of globalisation. It may not be perfect and it may not be enough, but it is probably more useful to ask how Labour's record on reducing inequality could be improved than to say it has never worked at all.