A week in inequality

 By Stuart R Brown

It’s been one of those weeks where I could have written a blog every day. Instead I’m taking the lazy option and giving you a summary of the news this week from an inequality perspective…

• Monday: I had my weekly flick through the Economist and saw that their lead article was entitled ‘hunting the rich.’ The article criticises several Western governments for imposing higher taxes on the rich.  In the UK, the 50p tax rate on those earning over £150,000 a year has been a hot topic in recent weeks. The argument against goes something like: it’s putting off the rich from creating jobs and they could leave us and take their trickle-down wealth with them, if they do that it is actually going to cost us economic growth and income. Therefore we should scrap it. Those for the tax argue that times are hard and if we really are all in it together than the rich should pay their fair share. Therefore we should keep it.
  
  Let me just highlight two points missing from these arguments. One, it’s pretty easy for those earning over £150k (around 30,000 individuals) to dodge tax and to shift their incomes intopensions etc., so they are unlikely to leave as a consequence of the tax. As yet I haven’t seen any evidence to show a mass exodus, or even a small one.
  
  Secondly, why is no one asking why our rich do not want to give more back? After all, the rich in France and Germany have written letters to their governments asking to be taxed more. Given the dire situation of government finance but yet the ability of the rich to push up profits of Prada and other luxury brands, it’s not asking too much for them to give a little more back. For some reason, the rich in the UK either don’t see it as their responsibility and/ or have forgotten that they gain directly and indirectly from public infrastructure.
  
  I’d agree that the gains from the 50p tax are unlikely to be substantial. But that is not a reason to give up on taxing the rich more. It is actually a reason to look for more efficient ways, through a land-value or wealth tax for example. Look out for our new report on pre-tax inequality in October for more detail.
  
  
• Tuesday: The BAE Systems announced job losses totalling almost 3,000. A staggering figure which will result in another blow to national employment figures. Plus, because these jobs are in the North and in manufacturing, it will only further unbalance the economy in favour of the South East and the service industry. 
  
  While many expressed regret at the decision, my reaction is a little more nuanced. Of course we need good jobs for engineers and people with strong practical skills, but surely we can put these talents to better use than making weapons. As our government considers how it can stimulate job growth, there must be a serious consideration of the types of jobs and sectors we want to support in the future. We’re going to be publishing an audit of ‘good’ sectors producing ‘good’ jobs at the end of October so come back to us for that too.
  
  
• Wednesday:  A group of academics published an alternative white paper, In Defence of Public higher Education. A comeback to the Government White Paper on Higher Education published earlier this summer, which proposes reforms based on a narrow focus on the market value of degrees to students, rather than the broader public and social value of the university sector as a whole.
  
  Our recent research found that it is true that universities deliver much more than graduates ready for the job market. We found that just one university alone was generating £147 million in social and economic value a year from taking students for low-income households.  However, several universities, including UCL have failed to reach their targets on recruiting students from low-income households this year. While I do have some sympathy for universities that say there are barriers earlier on in the education system that prevent them from taking more students from disadvantaged background, there is still much more they could do to integrate themselves into their local communities. Doing so would also help gain support from the general public against government reform.
  
  
• Thursday: New data was released showing that only 60 babies were adopted last year and just over 3,000 children and young people in total from a potential 65,000 in care. This is worrying for a number of reasons, not least because when someone is bought up in care we know that they are much more likely to end up as NEET and/ or in trouble. On Thursday I also learnt that the number of people volunteering had actually fallen. I couldn’t help but think that while the cuts in public services demand us to be more collective and responsible for the social problems in our neighbourhoods, the trend is actually that we are becoming even more atomised. Not good news for Cameron’s ‘big society.’

With the on-going Euro crisis and ups and downs in the stock markets it’s easy to miss the details of everyday news. But if this week is anything to go by, these broader economic changes are dripping down to affect our everyday lives in more ways than most of us can keep up with.