Poor performance

In preparation for a discussion on social mobility on Saturday’s Today Programme , I read a report on the subject by the Sutton Trust. The top line of the report, quoted by both Nick Clegg in his speech last Tuesday and Neil O’Brien who was debating with me on Today, is that Australia and Canada have similar levels of inequality to the UK but much higher levels of mobility. The DPM and the Policy Exchange Director used the finding to rebut the view that reducing inequality is the best way to increase mobility.

In fact, looking across developed economies the relationship between lower inequality and higher mobility holds pretty well, but what about the Sutton Trust’s Anglophone quartet?  The Trust report contains a table providing figures for mobility but also for per capita income (2010) and the 2008 Gini coefficient (widely seen as the most reliable measure of inequality). I wondered whether bringing income into the equation might shed more light on the inequality-mobility relationship.

My calculation was pretty basic but still came out with a powerful comparison. First, I calculated the national per capita income as a percentage of the OECD average. This gave figures of: Australia 121%, Canada 115%, UK 106% and USA 138%. Then I did the same nation by nation comparison on the OECD Gini coefficient average: Australia 110%, Canada 103%, UK 110% and USA 123%.

Because the per capita range is significantly higher (32 percentage point spread) than the coefficient (20 points) I damped down the former by reducing each number by a third, making the new per capita comparisons; Australia 114%, Canada 110%, UK, 104% and USA 127%. Then I simply subtracted the coefficient from the per capita. The resulting figures for per capita income minus inequality are: Australia +4%, Canada, +7%, the USA +4% and the United Kingdom -6% (if I hadn’t damped the per capita figures the respective figures would have been Australia +11%, Canada +12%, USA +15% and UK -4%).

Whilst the crude and arbitrary nature of these calculations won’t impress a statistician, this is more evidence that the UK is now a pretty grim place to be poor. It’s a double whammy. The least well-off in the UK suffer both from our relatively poor per capita income and our high inequality; they are both absolutely and relatively worse off than the poor in many other developed nations. I haven’t got the data to hand, but it is a pretty safe bet that the UK poor are also lagging way behind Scandinavia, Germany, Holland, Belgium and France.

Despite our current severe economic difficulties, I suspect most middle class people in the UK still feel they live in one of the richest countries in the world. Inequality not only makes life tougher for the poor, it also disguises the nation’s performance from a middle class for whom intra-national privilege disguises international weakness.

An important omission from data based on per-capita income is the social wage of public service entitlements. Including this would improve the relative standing of the UK poor in comparison to the equivalents in US but make little difference in relation to the other better performing nations, which on the whole have reasonably generous provision. And with an estimated 90% of public sector cuts yet to be implemented in the UK, the social wage is also set to substantially decline.

Now, the fact that the well-off in the UK are in the global Premiership while the UK’s poor have been relegated to the Championship does not in itself imply a specific policy response. Those advocating reductions in benefit entitlements and tough conditionality regimes will argue that they care as much about the poor as the advocates of greater redistribution. However, in comparison to debates about social mobility and welfare dependency, the sheer fact of the declining fortunes of our least well off is something which tends to get underplayed in mainstream debate.

As the Jubilee weekend approaches, the European Championships beckon (for the English at least) and the Olympics hove into view there will be a lots of flag waving and national pride on view. Perhaps at this time we should also bear in mind the following sentiments:

"Any society, any nation, is judged on the basis of how it treats its weakest members - the last, the least, the littlest."

Cardinal Roger Mahony, in a 1998 letter, Creating a Culture of Life

"A decent provision for the poor is the true test of civilization."

Samuel Johnson, Boswell: Life of Johnson