January 19, 2012
I’m a ninety-nine percenter and I’m not going to take it anymore!
Read a piece on BBC News by a hyped-up Michael Robinson about growing income inequality (“The Wealth Gap – Inequality in Numbers”). He attributes the rising “political temperature” on this issue to the OWS crowd. Apparently there is a “striking difference” between the rich and the rest of us. Don’t I know it? I feel it in my envious bones when the latest Porsche speeds past my 1995 Magna; particularly when it’s driven by some young whippersnapper whose father is clearly using his undue enrichment in spendthrift fashion on his own family instead of it being confiscated by the state and given to me.
Robinson’s piece in itself is highly recommended reading for those who feel they deserve more out of life. Three references are instructive. First he notes that David Cameron has “promised government moves against undeserved high pay awards”. I applaud this if he starts with a numbers of current Liverpool football club players – being paid far too much for their performances. As a very longstanding supporter, it is no fun getting up at 2am on Sunday to watch my team let down by a number of players being paid in the region of £100,000 per week.
Meryl Streep too should be stripped of some pay if reports of her portrayal of Maggie are anywhere near the mark. In fact, all movie stars, football and tennis players and golfers should be targeted. It is outrageous that they are richer than me simply because they can act or hit a ball or two in the right direction. I am one of the ninety-nine percenters and I am not going to take it anymore! “Choose the richest of them, so as to sacrifice the smallest number of citizens. But choose you must! For should not a small number perish in order that the mass of people be saved?” (Honore Gabriel Riqueti de Mirabeau, France 1789.)
A book by epidemiologists Richard Wilkinson and Kate Pickett (The Spirit Level) is “a policymaker’s must read”, according to Robinson. Apparently these two have discovered that everybody is worse off the more unequal is income. Don’t please buy the book before going to their web site (equalitytrust.org.uk). There you will find they have constructed an index comprising life expectancy, maths and literacy, infant mortality, homicides, imprisonment, teenage births, trust, obesity, mental illness (including drug/alcohol addiction) and social mobility all rolled into one.
Of course, using this index, poor old unequal USA sits last on their graph. But, before you start knowingly nodding, Australia and New Zealand fare badly as does the UK. On the other side, Sweden, Norway, Finland, Denmark, Holland, Germany and Japan are judged much better places to live; and apparently all because income is more equal. Don’t pack your bags. This is the most juvenile simplistic statistical nonsense that you could ever come across. Its only use is to show that doctors, particularly left-leaning ones, don’t make good economists, sociologists or statisticians. A recent blog on their site says a lot about it: “Like smoking over a baby’s cot, excessive pay needs to become unacceptable”.
The third reference is useful. It is to a new site launched by the Paris School of Economics to provide an international data basis of income dispersion. I looked at the percentage of gross income earned by those in the top one percent. The year 1921 was the first year recorded for Australia. The top one per cent earned 11.6 per cent of income. This trended down for sixty years before hitting a low of 4.6 per cent in 1981 and then trending up to hit 8.6 per cent in 2008 (the latest figure recorded). I also looked at France, Canada, Japan, UK and the US. A broadly similar pattern was evident except that only in the US was the degree of inequality higher (slightly) in 2008 than in 1921 and then it was less than in 1913.
I don’t know exactly why income inequality (measured using the top one percent), having trended down for around sixty years, has since trended up. We shouldn’t care or worry too much provided government interference/crony capitalism is not complicit. Going back to my English football example: forty and fifty years’ ago earnings for football clubs were much the same whether you won cups or you didn’t. That is now not the case. Success on the field brings untold millions in TV revenue and sponsorships. This means that a player now with that extra bit of skill can extract, not just an extra 20 quid a week, but a very large rent for his services. The market is responding to the needs of the day. It’s uncomfortable for us relatively impoverished supporters but we get over it if our team wins.
More generally globalisation has, and is, making the world more competitive. The penalties for mistakes are delivered more swiftly and more resoundingly. This means that companies are willing to pay more to those people who they believe can best stave off failure and bring success. It is not for governments or pathetic left-wing idiots to second guess this process. Sure some people will be overpaid. Leave that to the people and businesses overpaying them. The market sorts it out – eventually, imperfectly and after a fashion it is true, but that is better than any alternative Mr Cameron or the OWS rabbles could devise.
We should all concentrate on freeing the market from government interference and encouraging wealth creation in order to make us all more prosperous, rather than worrying about whether Mr Jones across the road is richer than we are and whether he deserves it. I don’t even worry about Michael Moore or Al Gore getting rich. So far as I know they don’t force people to buy their shonky products.
Peter Smith’s forthcoming book, Bad Economics, will be published in early 2012 by Connor Court.
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