CAMBRIDGE LETTER
The reality of economic apartheid
BY BILL KIRKMAN
|
A country where divisions between rich and poor are growing, and where they are geographically polarised, faces real social problems.
|
Financial inequality in British society is at its widest for 40 years. That is the finding in a new report just published by the Joseph Rowntree Foundation (“Poverty, Wealth and Place in Britain, 1968 to 2005”, by Danny Dorling and others
). The Foundation is a highly respected charity devoted to social policy research and development.
Moving backwards
The report notes that since 1970 area rates of poverty and wealth in Britain have changed significantly. The country is moving back towards levels of inequality in wealth and poverty last seen more than 40 years ago. Over the last 15 years, more households have become poor, but fewer are very poor. There was less extreme poverty, but the overall number of “breadline poor” households increased. Furthermore, wealthy areas of the country have been getting wealthier, and there has been a geographical polarisation of poverty, with the rich clustering especially in the southeast (that is, London and its environs).
In the words of a press release issued by the Foundation: “Researchers found that households in already-wealthy areas have tended to become disproportionately wealthier and that many rich people live in areas segregated from the rest of society. At the same time, more households have become poor over the last 15 years, but fewer are very poor.”
The picture painted is complex. Absolute poverty, clearly, is less than in the past, but, from the point of view of social cohesion, absolute poverty is not the only, nor even the main, issue. Relative poverty — how people see themselves by comparison with others — is of crucial importance.
Attitudes to inequality
Significantly, this is dealt with in a second report (“Public Attitudes to Economic Inequality” by Michael Orton and Karen Rowlingson), also by the Joseph Rowntree Foundation, and published simultaneously. This looked at people’s attitude to inequality. The researchers found that over the last 20 years, “a large and enduring majority of people have considered the gap between high and low incomes too large. However, people are more likely to think that those on higher incomes are overpaid, than to believe that those on low incomes are underpaid.”
All this certainly rings true for those of us who were at work in the United Kingdom in the 1950s and 1960s. The Second World War was a very real memory. The physical state of the country, particularly in the 1950s, was a constant reminder of how Britain had been battered. Yet, in many respects, this was an era of hope. It is of course foolish to look at the past through rose-tinted spectacles, and there were certainly many things wrong with society (notably, for example, attitudes to racial minorities); but for many, probably most, of us, there was a real sense of working together to make things better. People wanted better lives, better opportunities for comfortable living, better jobs, better housing, better healthcare. We expected the rewards of success, but we did not expect them to produce a kind of economic apartheid.
These new reports indicate that economic apartheid is becoming a reality, and that has worrying implications, which ought to be taken seriously by our political leaders. Divisions of the kind identified are not just morally dubious; they are potentially politically dangerous.
Need for openness
All this has some relevance to the controversy over private equity finance which has been hitting the headlines in the past few weeks. Again, the matter is complex, but there is much criticism over the secrecy of private equity firms, and over the tax advantages which investors in them — who are very wealthy — can enjoy. A report by a leading City figure, Sir David Walker, has made recommendations on how firms disclose information and communicate with staff, acknowledging they must “be more open”.
The huge financial rewards gained by private equity executives from investment deals have come under scrutiny by MPs, and calls to reduce tax advantages are likely.
Once again, the issue is one of increasing division — between the very rich, and the “ordinary” people who work in the organisations from which their wealth comes.
It is of course possible to formulate quite reasonable economic arguments in favour of the system of private equity finance, and to point to benefits deriving from it. Social attitudes, however, are not necessarily based on such economic arguments, and social attitudes should be taken seriously. A country where divisions between rich and poor are growing, and where they are geographically polarised in the way identified by the Joseph Rowntree Foundation, faces real social problems. Serious consideration needs to be given to the steps which are necessary to restore a situation where people can feel they are working together towards generally acceptable goals.
Bill Kirkman is an Emeritus Fellow of Wolfson College Cambridge, U.K. Email him at: bill.kirkman@gmail.com
Printer friendly
page
Send this article to Friends by
E-Mail
Magazine
