Unjust Rewards

September 27, 2008 at 9:48 pm (capitalism, Max Dunbar, poverty, socialism)

We tend to see inequality as man’s natural state, but for most of the twentieth century people’s incomes became more and more equivalent. It’s only during the last three decades that society has gone galloping the other way. Thatcher’s cabal of free-market evangelists removed all conceivable obstacles to businessmen’s ability to become as rich as possible. Selling this to the public, the elites of Britain and America used the analogy of a ‘trickle-down effect’; if the rich were allowed to create and keep as much wealth as possible, some of this wealth would make its way down to the middle classes and the poor – perhaps by a kind of osmosis.

It was a myth: the lie of the century. The wise rich invest or save money rather than pump their cash into the economy in a way that others can benefit from it. (State handouts, on the other hand, roll into bank accounts and then roll straight back out again to be spent on rent, utilities, drink and food.)

For all the talk of freedom and opportunity, social mobility ground to a halt. Nick Cohen describes the current state of affairs:

Jo Blanden of the London School of Economics, Stephen Machin of University College London and Paul Gregg of Bristol University examined the two big generational surveys from the last half-century – the National Child Development Study of 1958 and the British Cohort Study of 1970 – which followed newborn babies through schooling and into adulthood. They looked at how children had done compared to their parents; whether they had risen or fallen in the pecking order, or stayed pretty much where their mothers and fathers once were. They found that, on average, a boy born to a well-to-do family in 1959 earned 17.5 per cent more than a boy born to a family on half the income of the rich boy’s parents. If the equivalent Mr and Mrs Moneybags produced a son in 1970, he would grow up to earn 25 per cent more than his contemporary from the wrong side of the tracks.

In other words, the rags-to-riches journey is harder today than it was in the 1950s. Destinities are set early and set in stone. In Unjust Rewards, their seminal polemic on the mess we’re in, Polly Toynbee and David Walker reveal that life’s courses are laid in ways we don’t even consider. Like vocabulary:

By the age of four the child from a professional family will have had 50 million words addressed to it. A working-class child will have heard 30 million, but the children from families on welfare will hear 12 million. Here was another shocking fact: by the age of three the child of the professional family will have a bigger vocabulary than the adult parents of the welfare child.

The divide has become so pronounced that even the Daily Mail rants about ‘fat cat’ executives and boorish City traders. The gap between the middle class and the rich, and even between the rich and super-rich, is as wide as the historic chasm between rich and poor – itself encapsulated in the recent story of the private equity manager complaining that he paid less tax than the person who cleaned his office. Old money is worried: ‘the toffs or would-be toffs of the Tatler are willing the Tories to say that exponential incomes are socially damaging, corrosive and destablising.’ Middle England, too, ‘thinks the rich should pay more tax.’ Yet government spends far more time and resources going after petty benefit fraudsters.

I don’t know who coined the phrase ’socialism for the rich and capitalism for the poor’ but its author deserves a knighthood. We know that tax planning schemes are employed by the top percentile to help them avoid making a substantial contribution to the society in which it makes its money. We know that government is soft on high-end tax fraud because it fears that Britain would collapse without the Belgravia set. We know about the ridiculous bonus culture in which high earners are given additional rewards just to do their jobs. Toynbee and Walker ask us to do a thought-experiment:

Imagine if workers had to be bribed with extra cash just to carry out their contractual responsibilities. Jobseeker’s Allowance would be raised and raised again in order to make the people getting it strive harder to find work. Hospital cleaners would be paid a bit more every week, to make them scrub harder. But in the real world the logic of low pay runs in the opposite direction. At the poor end, benefits are cut to encourage more endeavour in job-seeking; cleaners’ pay is kept low to clock up higher productivity per pound spent on the NHS.

They go on to argue that serious redistribution of wealth would not only be morally right, it would also save the taxpayer millions of pounds of public money that we spend on prisons, doctors, mental health teams and other agencies picking up the pieces of broken lives.

There has been some redistribution but not enough. The authors point out that the minimum wage is not a living wage – the true figure is around £7:20. £200 a week doesn’t make work a route out of poverty, especially factoring in transport costs – many low-paid jobs are based in supermarkets and call centres far from residential areas.

Class is the one prejudice no one talks about. At my comprehensive school the biggest targets for bullies weren’t the black or Asian kids but the poor kids. It was social death to be labelled a ’scrubber’; and our uniform didn’t conceal the class differences: as Toynbee and Walker write: ‘[I]t doesn’t take long in the playground to sort out where they stand in relation to the rest.’

Different classes are like different worlds, and the triumph of their book is in showing the gap not just in income but perception. As part of an aspirations programme group of working class pupils from Brent were taken up the road to Oxford University. ‘What had they imagined university to be? They said ‘like a prison,’ ‘really hard work and no social life,’ ‘horrible, worse than school and locked in all the time.” Undergraduates showed them the halls of residence.

At home the Brent pupils shared rooms with siblings but here was a room of their own, with their own bathroom, use of a kitchen and common room… were students ever allowed beyond those great college walls? Yes, all day and all night. They asked if they could have visitors and if their parents could come and see them? Yes, any time and even have a cheap room to stay in overnight. And was term time just twenty-four weeks of the year? Yes, but they could stay on in the holidays if they liked. They could even have people to stay in their room too, if they signed them in. The opposite sex? Yes! Wow!

This little anecdote shows us that maybe the way forward is to close this gap of perception. As Irvine Welsh said, the key to who wins in society isn’t money or connections. It is the power of expectation.

(And on that note, a big welcome to our newest contributor Max Dunbar, who can also be seen at his own blog and at the marvellous Butterflies and Wheels. We’re very glad to have him – VP)

2 Comments

  1. Unjust Rewards « Max Dunbar said,

    [...] Cross posted to Shiraz [...]

  2. Charles Pierce said,

    I was interested to find this blog. 20 years ago I had a book published on different economic concepts to point the way to a sustainable world economy. I discuss many issues including the ‘trickle-down effect’ and redefining ‘wealth’ and ‘production’. Someone who liked the book recently contacted me to suggest that I update and re-publish it as a blog. She set up the blog, and the book is now complete on the blog in a series of postings. Here is the link:

    http://www.economicsforaroundearth.com

    With all good wishes,
    Charles Pierce

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