Will Hutton is right to identify economic inequality as the cause of so many societal ills (“We are scared to face the real issue – it’s all about inequality”, Comment). Our sluggish, low-pay economy, high levels of poverty, the housing crisis, our obesity epidemic and welfare bill are all driven by the UK’s extraordinary levels of inequality.
Hoist by our own definitions there.
The UK doesn’t actually have any poverty. What it does have is relative poverty: which is another name for inequality of course. So, yes, given that that “relative” is all too often left out of the conversation our poverty levels are indeed to do with inequality. Because they’re the same damn thing.
Further, given that we don’t have any poverty our welfare system is attempting to reduce relative poverty. So of course the welfare bill is driven by inequality. It’s an attempt to reduce inequality that causes the welfare bill, d’ye see?
As to what we do about it all, difficult one that. The various places that have tried to reduce income inequality directly have fucked up quite royally. The various places that have tried to do it by vast taxes on high incomes which are then redistributed haven’t done all that well. And the places that have managed to reduce consumption inequality the most have done so not with high income3 and wealth taxes but with high consumption taxes. Ie, the Nordic solution. Their wealth inequality is about the same, sometimes a little higher, than ours. Their market income inequality is a little lower and their consumption inequality is much lower. Paid for largely through those high VATs, for their wealth taxation is often lower than ours and their income taxation not much higher.
Which is something of a toughie for the class warriors here. The actual policies that lead to their claimed desired outcome are policies that they wouldn’t countenance in and of themselves. VAT at 25% anyone?