Living with austerity how is it affecting the better-off half of the 99%? Danny Dorling School of Geography and the Environment University of Oxford Social Research Institute Lecture: July 1 st 2014 Baring a few inequality-sceptics we now accept inequality harms society, but what aspects are most harmful? What is the methane and what is the CO 2 - socially?
My aim is to discuss this Reports on austerity rightly tend to concentrate on those who are hardest hit by the cuts, the disabled, the poorest, lone parent families and the young. However, there is another group which have seen their living standards curtailed. Their children go to university, but amass huge debt in doing so and have low chances of gaining a good job or being able to afford a decent home. This talk discusses how difficult it is to grow solidarity and share experiences and empathy in a country that is still so economically divided - even when (and if) economically there is a little more coming together.
This is one image of the UK shaped by the supposed value of homes Please don t make me sound like a prat for not knowing how many houses I ve got. David Cameron, 2009 THIS SLIDE IS A YEAR OLD. ADD 100bn to the London circle, based on 3bn of 2013 sales (Q1 to Q3), out of 5bn of UK sales Scotland is two small circles
During 2013 housing prices in London rose by around 40,000 for an average flat or house that was sold as compared to the previous year. This brought the cost of a typical London home sold on the market up to just above 475,000. If this rate of change continues the half million pound price barrier will be breached during 2014. Area = Area = land: rise in prices:
Scotland is addressing housing, but in England: the bedroom tax, and tenants losing their rights. My book All that is Solid ends: In January 2014 the Financial Times released an analysis showing that over the course of just the last five years the equity of mortgage holders in Britain had fallen by 169 billion while that of landlords had risen by a massive 245 billion. There is no surer sign of a housing crisis turning into a disaster than this (the estate agent Savills used geographical mortgage data at postcode level to determine this). Landlords' total equity has more than doubled from 384bn a decade ago to 818bn today. The total equity of homeowners with mortgages has dropped by 169bn because on average buyers now borrow more. K. Allen (2014) Personal Communication on "cash buyers versus mortgages, the Savills analysis", January 16th, published as K. Allen, Home buyers left behind in Britain s two-speed housing market, Financial Times, January Effects of the cuts 2010-16 Oxfam (2012) The Perfect Storm
The net wealth of the UK has fallen since 2009, but the first three bars above suggest an overall increase in wealth. The growing debt of tenants by partly balance this. Wealth transfers since 2009 and from 2004, UK.
We have turned into a country Households with children in private that is rapidly reverting back renting, % in England 1984-2012 to its past. By now it is likely that more than a quarter of children in England live in families with a private landlord. But we are not becoming more European: 2008 Figure 3.4 of Social Mobility and Child Poverty Commission (2013) State of the Nation 2013 October 2013, London: The Stationery Office https://www.gov.uk/government/ uploads/system/uploads/attachment_data/file/251213/state_of_the_nation_2013.pdf Countries as different as Switzerland and the Netherlands are continuing to reduce inequality, steadily and slowly over time.
Within the top 10% inequality grows
160,000 a year to be in the 1%
Entry cost to top 1% varies by area
Higher income inequalities eventually lead to higher wealth inequalities, but there can be a lag of a generation (the work of Thomas Piketty makes explaining all this far easier).
It is worse in the USA
$100m households by country, 2011, note the UK and USA.
What is the effect of overall inequality on: policy?
ONS would rather you did not see this estimate of mean UK wealth per percentile as they cannot verify it.
What leads: innumeracy or inequality? Who best understands that they can t all be in the 1% at ages 16-24?
Some spend most on those who need most, but not the UK.
Who thinks most of themselves and why?
We are rarely told that greater inequality is not inevitable.
In UK who is most affected alters where is hit most by Tax (VAT) and multiple benefit changes In 2013 the children s commissioner explained what is happening in the UK due to the nature of cuts and austerity: Families with children will lose more of their income than families without children. However, lone parents will lose the most out of everyone. Office of the Children s Commissioner (2013) A Child Rights Impact Assessment of Budget Decisions- children and young people's version, 27th June, http://www.childrenscommissioner.gov.uk/content/publications/content_701
Note: only 1% within the 10% gain, those who s tax is cut to 45% (no c.b.)
Geographical comparisons show that those countries which reduced top rate taxes the most since 1960s have seen the 1% gain the most since 1960. Currently the top 1% take 20% in the USA and near to 15% in the UK. Thomas Piketty s work may well come to form a new consensus This graph shows how government policies rather than global market forces have changed the status quo in different countries since 1960. Source: Figure 4 in: http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.27.3.3
Scotland: "It is principally for these reasons that many Labour people, alienated within their own party, are moving towards a yes vote in September. These deeply reluctant nationalists have begun to realize that they will only have one chance in their lifetimes of bearing witness to change and participating in the construction of a more just and moral society (no matter what it costs the moneyed classes). They know it won t happen in Cameron and Miliband s Oxford-run Britain." Why Glasgow is the Scottish independence game-breaker Nurturing and regenerating the city has never been more important for the country as a whole - Kevin McKenna The Observer, Saturday 10 May 2014 The other game changer may be UKIP
Conclusion (6 slides to go..): international context matters Earlier this year it was reported that just 85 people owned as much as the poorest half of humanity (by Oxfam). Forbes then updates the figure to 67, then to 66 people. We need to know that we are living, as the old curse suggests, in unusual times.
World views on Income inequality (Ipsos Mori) To what extent do you agree or disagree? Having large differences in income and wealth is bad for society overall Agree Disagree Total Great Britain 1 2 3 4 5 6 7 8 9 T 10 11 12 13 14 15 16 17 18 19 20 China Spain Turkey Germany Russia S Korea Italy Brazil India Total Belgium Poland France Canada GB Argentina S Africa Australia Sweden Japan US 91% 86% 84% 84% 83% 81% 78% 77% 77% 74% 73% 72% 68% 68% 67% 67% 64% 64% 63% 60% 47% 12% 5% 3% 5% 8% 9% 10% 5% 7% 11% 9% 9% 10% 10% 4% 9% 5% 11% 7% 9% 12% 12% 9% 16% 13% 13% 18% 19% 16% 17% 23% 24% 22% 23% 32% 28% 32% 29% 41% Base: 16,039 adults across 20 countries (1,000 GB), online, 3-17 Sept 2013 Question 16e Unpublished
But WE have been here before. In 1913 wage inequality between servants was 25 fold (Blenheim).
Correlation is not causation, but neither is it coincidence (we learn)
People become (rightly) suspicious
17.7 Singapore 15.9 United States 15.0 Portugal 13 8 13.4 Israel United Kingdom 12.5 Australia 12.5 New Zealand 11.6 Italy 10.3 Spain 10.2 Greece 9.4 Canada 9.4 Ireland 9.2 Netherlands 9.1 France 9.0 Switzerland 8.2 Belgium 8.1 Denmark 7.3 Slovenia 6.9 Austria 6.9 Germany 6.2 Sweden 6.1 Norway 5.6 Finland 4.5 Japan The 90:10 ratio, is fuelled by the 1% (as is the Gini) USA 15 9 Germany 6 9 Data from UNDP as published in Injustice in 2010, country size in map is GDP pre crash. UK 13 8 France 9 1 Spain 10 3 But inequality is an abstract metric it has to be made real children having no holiday, adults with too little good quality food the elderly poor who are not respected Japan 4 5
Income share of the 1%, Piketty data End: The income of the 1% matters most (source: unequal health the scandal of our times, Chapter 1) 20 18 16 14 12 10 8 6 4 Finland Sweden Norway Denmark UK Canada Ireland Germany Italy France Spain Switzerland Australia Netherlands USA 2 0 0.2 0.22 0.24 0.26 0.28 0.3 0.32 0.34 0.36 0.38 Gini Measure of income inequality (Luxembourg Income study countries)