February 20th 2018 is the United Nations’ World Social Justice Day. Yet even as achievements in extending social justice are celebrated, the backdrop is one of growing inequality.
To illustrate this, Oxfam published a startling report last month showing that the richest 85 people in the world are worth more than the poorest 3.5bn. And that the lower half of the global population controls barely 1% of global wealth, while the richest 10% own 86% of all wealth, with the top 1% accounting for 46% of the total.
Billionaire wealth, according to Oxfam, has risen by an annual average of 13% since 2010. This is six times faster than the wages of ordinary workers, which have grown by a yearly average of just 2%.
Wealth and income inequalities are also greater in some countries than others. The UK is one of the most economically unequal of the main industrialised countries.
On income inequality, UK households in the bottom 10% of the population have on average a disposable income of £9,644. But the top 10% have net incomes almost nine times that (£83,875). Inequality is much higher for gross incomes (before tax, benefits and tax credits), with the poorest 10% having an average income of only £4,436, while the top 10% have an average income of £107,937) or 24 times larger.
Income inequality is even higher between those at the bottom of the income scale and the wealthy. The top 1% have incomes substantially higher than the remainder of the top 10% – an average income of £253,927. The top 0.1% had an average income of £919,882.
Danny Dorling reveals how decades of improved equality after WWI have been consistently eroded since 1979.
Inequalities in wealth have widened in the UK too, even as the assets of the poorest have dwindled. The bottom 10% has seen their net wealth decrease by 42% since 2010, to stand at £32,000 today, whereas the wealthiest 10% have had a boost in their wealth of over the same period of 38% to £1.1m.
The richest in the UK owe their increase in wealth to the property market and to private pensions. The poorest have most of their assets, sure as they are, in physical wealth, such as household possessions. This points to wealth inequality being more unfair than income inequality, where higher incomes are taxed more.
Wealth accumulation by the richest is more and more a ‘renting-seeking’ activity, whereby assets are accrued not through work but by inflation of asset values. The property market in the UK is a case in point.
Perhaps unsurprisingly, wealth tends to be concentrated in the hands of older men, with women, young people, ethnic minorities, disabled people and the unemployed having relatively low asset ownership. Lone parent families have the lowest level of wealth of any household type.
And the UK get poorer the further north we go. The lowest average household wealth is held in the north-east (at £163,000) and the highest in the south-east (£381,000).
Inequality is a major contributor to economic inefficiency, educational under- achievement, and disparities in life expectancy and morbidity rates. It also stifles social mobility and makes real meritocracy impossible.
Surely it is now time that policy-makers in the UK consider taxes on wealth rather than incomes to reduce inequality, promote social mobility and confront the root causes of Brexit?