26 September 2013


While governments of developed countries implemented austerity budgets to counter the economic slump in 2008, the number of individuals in the world with more than one million US dollars of free cash surged, according to London School of Economics professor Robert Wade.

In the previous 30 years the top one percent of Americans ‘gained 57 percent of the increase in national income’ and, in the seven years to 2007, they gained 93 percent of the increase.

In Britain the story is similar. The chief executives of 100 of the country’s largest companies earned around 40 percent more in 2010 – 145 times the median wage – despite almost zero GDP growth.

Such a concentration of income, says Wade, gives financial firms ‘the leverage to colonise the governments of nation states and shape public policy … nowhere more so than in the US and the UK which house the major international financial centres’.

Meanwhile in the 2000s, high-income households in America have paid their lowest share of federal taxes in decades ‘and corporations frequently avoid paying any tax at all’.

This is because most of their income is classed as capital gains ‘three-quarters of which goes to the top 1 percent of income earners’. The tax on capital gains is the lowest it has been since the 1920s.

There is an ideological acceptance of a conservative but widely held view, particularly since 2008, that governments exist to ‘encourage largely free, private markets’ accepting the income distribution that results.

Even people who are never likely to benefit have accepted unquestioningly the ‘non-negotiable’ values such as freedom, individual initiative, personal responsibility, the level playing field, private property, democracy.

But because of this way of thinking, the question of ‘when are the rich too rich?’ has not prompted the research and debate which would put the issue of inequality centre stage.

Many of us are much more comfortable worrying about “poverty” than “inequality”, because the former is about helping others, while the latter comes close to questions about the appropriateness of the income of themselves and their peers. In other words whilst we can embrace the idea of charity - sharing from our surplus - we are reluctant to address the structures that create inequality as this might pose a threat to our own privileged status. An issue highlighted by Brazilian bishop Helder Camara in his often quoted statement "when I feed the poor they call me a saint, when I ask why they are poor they call me a communist".

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