Society cannot tolerate inequality - some reflections at the end of 2010
History suggests that there is a limit to the degree of income inequality that is sustainable in society. For example, gross levels of income inequality is believed to have been one of the causal factors of The Great US Depression in the 1920’s and there are many reasons to believe that inequality is a contributory factor to the situation we now find ourselves in nationally and globally.
The HEAP (Hierarchy of Earnings, Attributes and Privilege Analysis) published in 2009 drew the conclusions that Ireland did not use the benefits of our economic boom to reduce levels of inequality. On the contrary, the distance between those at the top and those at the bottom actually widened.
At a global level the combined wealth of the world’s richest 1,000 people is almost twice as much as the world’s poorest 2.5 billon people. Banks, companies and even some individuals are now worth more than entire countries.
The growth of an unaccountable global financial oligarchy that operates freely outside the remit and control of national governments has most definitely contributed to the creation of an unstable economic system, nationally and globally. The concentration of financial capital, the rise in speculative trading and risk passing have all served to weaken economic development.
According to New Market theory as long as wages and prices were flexible enough, growth and full employment would follow. In fact, according to this theory, the recession should never have happened. In reality we know that non productive growth was a dominant feature of the economy over the past 10 years.
Rather than strengthening our economic base and supporting the creation of sustainable jobs the model of development pursued enabled the transfer of wealth from the public to private sphere and distribution of wealth upwards at a rate never before seen.
Along with the obscene rise in incomes of those at the top, a ‘casino type’ consumer culture grew, where the price of something was secondary to the desire to own and accumulate. Property prices rose to extraordinary levels and the rate of house building far exceeded our capacity to either purchase or reside in these houses. Owning a second house or an apartment or two was considered the social norm.
For the majority of people the massive expansion in consumption was funded largely by borrowings and access to easy credit. Wage levels for many did not keep up with living standards and the spending spree of the past decade. Wage inequality actually grew in recent years and we now have the highest levels of personal debt in any Western country.
It’s worth noting that the most popular car sold in August of this year was the Series 5 BMW. Merrill Lynch also announced this year that the number of millionaires in Ireland increased in 2009. It doesn’t take a genius to see how destabilising the effect of such extremes is likely to have in a county with a small population like Ireland.
While it is true that there was a general rise in the incomes of the poorest during the period of the boom, in a highly unequal society, people have to ‘run harder to stand still’ in order to maintain their (increasingly precarious) link with the rest of society. Social stigma and its negative effect on health and wellbeing has been well documented by such writers as Richard Wilkinson and Kate Pickett.
The ‘you get what you deserve and deserve what you get’ mentality accelerated over the past decade resulting in a highly segregated and divided Ireland. Private education, private health care, designer cars, gated homes became the benchmarks of social progress.
The redistribution of wealth upwards was enabled by a political and legislative process that allowed many dubious and unethical economic and political actors to operate (just about) within the rule of the law. The systematic non-enforcement of legislation, the under regulation and deregulation of the financial system, the labour market, planning and development rules was the norm. Controversies this year in relation to politician’s expenses and bankers bonuses highlighted very effectively the tensions between unethical practices and legal rights.
A central feature of inequality within society is the way power is acquired and used. Research conducted by Transparency International during 2010 showed that more than eight out of ten people believed the Government was ineffective in tackling abuse of power. The survey also highlighted the belief that there is a strong link between corruption, the failure to hold anyone to account for wrongdoing and a refusal to accept responsibility for what has gone on.
During 2010 there was substantial public discussion and recognition of the extraordinary lack of accountability by those who hold power in Irish society ranging from bankers to politicians to church leaders. Fintan O’ Tooles’ book ‘Ship of Fools‘ published in 2010 set out with chilling clarity and precision the links between elite stakeholders and political decision makers and the disastrous consequences arising from some of these relationships.
The overuse of the phrase ‘in the national interest’ by our politicians was widely ridiculed this year given the obvious lack of concern with the common good, the dominance of special interests and the influence significant stakeholders have within the political system.
Franklin D Roosevelt in his inaugural speech of 1933 spoke about the New Deal and the importance of social values combined with decisive action. ‘We now realize as we have never realized before our interdependence on each other; that we can not merely take but we must give as well; that if we are to go forward, we must move as a trained and loyal army willing to sacrifice for the good of a common discipline, because without such discipline no progress can be made, no leadership becomes effective.
At the end of 2010 the essence of this message holds a lot of relevance for us. There is a palpable desire for change, for decisive leadership but most importantly for collective ownership of our future. The advancement of human society has largely been achieved through citizen based actions and it is this starting point that will be at the heart of rebuilding our democracy.
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