The inequality gap

(writing this on holiday on my iPad so please excuse mistakes and the lack of links)

For many years I have argued that Britain suffers from a social aspiration gap between the future we say the want and the course we are set on relying on existing ways of thinking and acting. The future we want relies on citizens,in aggregate, being more engaged more self reliant and more pro-social. But what has this perspective to say about what many people would say is the biggest problem now facing our society, growing inequality?

When doyen of conservative columnists Charles Moore writes a column entitled 'I'm starting the think the Left might actually be right' it's time to sit up and take notice. His article contains this paragraph:

' The rich run a global system that allows them to accumulate capital and pay the lowest possible price for labour. The freedom that results applies only to them. The many simply have to work harder, in conditions that grow ever more insecure, to enrich the few. Democratic politics, which purports to enrich the many, is actually in the pocket of those bankers, media barons and other moguls who run and own everything.'

Moore's analysis is confirmed by a report published today but the excellent Resolution Foundation. The report's headline finding is this:

' The share of national income going to the bottom half of earners in Britain has fallen dramatically over the last 30 years.....These ordinary workers have seen their share of GDP fall by a quarter, at the same time as the share going to the top 1% of earners increased by half.'

Not only does gross inequality seem endemic to modern 'free market' capitalism but from the work of Picket and Wilkinson and others it seems at least very likely that among rich countries more unequal scieties are also more unhappy societies with greater social problems.

It used to be that only the left talked about inequality as a problem but - as Charles Moore exemplifies - this is no longer the case. But there is another way in which the debate has changed. Just a few years ago Labour politicians were like Peter Mandelson and Tony Blair were happy to argue that the rise of the rich didn't matter as long as the poor were doing well also. But as living standards fall at their fastest rate for three decades and the number of people in poverty rises this argument is threadbare.

The more progressive strategy, articulated most fully in the mid nineties in the Commission on Social Justice, that the route to greater equity lay in long term preventative and capacity building measures, particularly investment in skills and education may still hold water but despite more than a decade of rapidly increasing education investment and rising standards the is little sign of success so far.

Which leaves us with little other than redistribution and shame. The latter may be more powerful than we imagine. I am told by insiders that there is a real shift in attitudes to pay and bonuses in the financial services sector, although there isn't much sign of the pips squeaking as yet. As for redistribution the gap between what people say they want - greater fairness - and what policies they are wiling to sanction remains large.

The idea that the 50% tax rate should continue at least until the deficit is cleared sees to be largely uncontroversial (despite mutterings among Conservative backbenchers and free Market free tanks). But how about the other most obvious steps? It reads like a 'how to' manual for losing elections. Here are four vote losers to start with:

Well-off pensioners (a group whose electoral power has seen them almost untouched by austerity measures) to pay National Insurance on their earnings.

Capital gains tax to be raised to match income tax levels

Abolish higher rate tax relief on pension contributions

Introduce a new comprehensive property tax

The point of this list is not argue for these measures but to show how the most obvious remedies to the widely recognised problem of widening social inequalities still seem highly unpalatable. There may be other routes to greater social fairness but they will still require more political will and popular support than is evident today.

This gap between the ends we want and the means we will is the problem which better engagement is intended to address. It is only through proper engagement that we face up to the fact that we may have to agree to things we instinctively oppose in order to achieve the ends we desire.

This is the why closing the social aspiration gap is relevant to the problem of social inequality.