Tuesday, 18 March 2014
Inequality in the UK and the upcoming budget 2014
As the UK government prepares to present an annual budget designed to cut welfare benefits further for the working poor and squeeze real incomes for the average earner, Oxfam reports the country's five richest families now own more wealth than the poorest 20% of the population. In its report, a Tale of Two Britains (mb-a-tale-of-two-britains-inequality-uk-170314-en-1), Oxfam said the poorest 20% in the UK had wealth totalling £28.1bn – an average of just £2,230 each. The latest rich list from Forbes magazine showed that the five top UK entries were the family of the Duke of Westminster, David and Simon Reuben, the Hinduja brothers, the Cadogan family, and Sports Direct retail boss Mike Ashley – between them had property, savings and other assets worth £28.2bn. These are Britain's own top oligarchs (aside from the Russian ones that live in London). Indeed, the 100 wealthiest people in the UK have as much money as the poorest 18 million – 30% of all people. The total wealth of these oligarchs rose £25bn last year to £257bn to surpass the £225bn held by the poorest 30% of British households. And remember household wealth consists of the ownership of a house or flat, pension fund and other possessions like cars. Total household wealth in the UK is £10trn, with the top 10% having £967bn and the bottom 10% just £13bn. The bottom 10% really have no wealth at all except old cars and a few personal possessions. Imagine a room with 100 hundred people. 90 people are so short they can hardly reach the door handle to get out. Another nine people are only high enough to get a drink from the table. But one person is so huge that his or her head hits the ceiling and bursts through it. Such is the scale of inequality and concentration of wealth. Even the top 10% of wealth holders really own only their house that they live in along with maybe a reasonable pension. It's the top 1% or even the top 0.1% who really have wealth in stocks, bonds and commercial property and businesses etc. You see what really matters is not personal wealth but the ownership of the means of production. That gives you power as well as wealth - this is what oligarchs have. What is decisive for capitalism is surplus value (profit, interest and rent), not wage income or spending. Control of that surplus is key. The main feature of the last 100 years of capitalism has not been growing inequality of income. The main feature has been a growing concentration and centralisation of wealth, not income. And it has been in the wealth held in means of production and not just household wealth. What will we see in The chancellors budget tommorrow afternoon ? Well very little to help the poor it goes without saying. I'd predict some more tax cuts including a raising of the tax bands again to £12 k which will be championed by the government in raising the poorest tax thresholds whilst doing nothing to help them with the cost of living. We are also told there will be a extention of the rather fruitless "help to boy" scheme the tories have pushed which has inflated the propety bubbled even more rather than actually helped anyone. This coupled with plans to build a new Garden City in Ebbsfleet in Kent totalling around 15,000 homes is a drop in the ocean to the amount of homes we do need. I am not sure which type of homes these will be but i am sure they wont be cheap and available to all. Now we know from marxist economics that rising inequality is not the cause of economic crisis under capitalism even though inequality cannot and should not be ignored. This is more a consequence of a crisis than a cause of one in the first place. A correlation between rising inequality, slower growth and economic recession does not prove causation. , that instead rising inequality has been a consequence of capitalism trying to avoid slumps from declining profitability by trying to squeeze more out of the workforce in increased surplus value - during the neoliberal era. We can safely say that whatever George Osborne comes up with any rhetoric or fiddling the figures tommorrow we know that inequality will continue to grow under capitalism as it struggles to pull itself out of a crisis one of the deepest for hundreds of years if not ever.