How Unequal Must Society Be, To Be A Fair Society?

Polly Toynbee has written on this subject 4 times in the last 2 days - here, here, here and here. Some facts to highlight from her articles:-...

'74% of voters in the UK think the gap between rich and poor is too large'.

'The top 10% of income earners get 27.3% of the cake, while the bottom 10% get just 2.6%'.

'Twenty years ago the average chief executive of a FTSE 100 company earned 17 times the average employee's pay; now it is more than 75 times'.

'Tax consultants Grant Thornton estimated that in 2006 at least 32 of the UK's 54 billionaires paid no income tax at all'.

'So the top 10% now owns 54% of personal wealth - and that's only what they declare. Despite the crunch, the total packages of chief executives of the 30 biggest UK companies rose by a staggering 33% in 2007-08'.

'How much, we asked our group, would it take to put someone in the top 10% of earners? They put the figure at £162,000. In fact, in 2007 it was around £39,825, the point at which the top tax band began. Our group found it hard to believe that nine-tenths of the UK's 32m taxpayers earned less than that. As for the poverty threshold, our lawyers and bankers fixed it at £22,000. But that sum was just under median earnings, which meant they regarded ordinary wages as poverty pay'.

'the bottom tenth pays 38% of its earnings in direct and indirect taxation, while the top tenth pays only 34% - and top tax avoiders far less'.

'Social interventions, from SureStart to Aim Higher, do work. They help counter the weight of disadvantage; they add to future productivity; they are worth every penny and more of the public investment behind them. But their authors are strangely silent. They don't make the public case for the taxation on which this spending depends – not necessarily more taxation but fairer taxation, to do away with today's fiscal anomalies and the absurd situation where poorer households pay a higher proportion of their income in tax than the best off'.

So where to start?

When broaching this subject, the Right will talk a lot about merit, incentives and morality. Some will still argue that inequality doesn't matter at all - those few suggesting this have lost the argument for now at least. As now, even the Tories have to pretend to want to reduce inequality to stand a chance of getting the support of the 1 in 5 of the electorate they need for government under our undemocratic electoral system. The Tories may pretend (or maybe even truly desire) to reduce poverty and inequality, but they still prescribe the same old Thatcherite solutions that actually tripled it in the 1980s and early 90s.

Leaving aside whether even a meritocracy would be fair or desirable, for the argument from merit to stand up, the Right have to justify the difference between a chief executive pay and the minimum wage. Does the chief executive really merit wages hundreds of times greater than a retail or hospitality worker slaving 50 or more hours a week on poverty pay?

Would slightly less pay or slightly higher taxes really disincentivise most on over £250,000 a year? There is even an argument that more pay can disincentivise effort in some cases - thousands of middle and upper class 'downsize' every year to have more leisure time. They could only do this because they can afford to. New Labour have accepted the argument that the filthy rich can up and leave the country, and without international effort some will use the lowest tax countries to lower taxes everywhere - this is a downward spiral that leads to zero taxes for the richest. Is that what we want? How many really would leave their comfortable settled lives in England for a mere 10% extra tax? And would we miss them anyway? Most chief executives have been with their companies their whole lives - international head hunting is greatly exagerated.

Finally the morality of the poor has come back into vogue - thanks largely to our gutter right-wing press. So the Victorian concepts of deserving and undeserving poor are to be assessed with Purnell's new welfare state. Cameron can talk openly of fat people, the poor and alcoholics having only themselves to blame. Yet nothing is said of the morality of the idle rich or wealthy tax avoiders or those who try to justify obscene pay. The wealthy always claim to have worked hard to get where they are, but few acknowledge that in fact, most of their wealth has come from asset appreciation, inheritance or initial support from a privileged upbringing.

So, most of us don't buy the Right's arguments of 'trickle down' economics, even the Tories pretend not to like it anymore. The wealthy use their resources to divide and rule a disenchanted masses with daily propaganda in the press. This Labour government that so lets us down, is still our best hope of getting even the simplest progress. Some rightly argue that council tax bands should be widened. Labour shy away for fear of the powerful big home owning pensioners revolt. But few of these people who revolt will vote Labour anyway. The problem for Labour is, if it doesn't start addressing this problem, the masses will either accept the Tory lies or join the apathetic 40% who have already given up. Without exciting this core group with real measures to tackle the massive inequality we face, Labour cannot win. Surely we can do better than the poorest 50% of the population only owning 6% of the wealth. Does anyone think that is a fair place to be?