The Equality Trust treats us to a feast of economic nonsense today in their whinges about wealth inequality. They manage to entirely forget that anyone with a £10 note and no debt is richer than 10% of Britons. That’s 10% of Britons put together. This though is only the least of their economic sins:
New analysis by The Equality Trust, using the wealth estimates of Forbes and Credit
Suisse, reveals a shocking level of wealth inequality in the UK, and shows how this
inequality has increased since 2010
According to the Credit Suisse Global Wealth databook, https://www.creditsuisse.com/media/assets/corporate/docs/about-us/research/publications/global-wealthdatabook- 2019.pdf, the wealth of the bottom 20% of the UK population is 13.28. The
bottom 10% has negative wealth of $109 billion and the second decile has a positive
net wealth of $21 billion. This gives a total figure of $-88 billion.
Quite, people can have negative wealth. Thus someone who has only £10 of actual cash, but no debts, is richer than that bottom 10% put together. In fact, than that entire bottom 20% put together.
We can and should go further than this though. Who are that 10% without significant net assets? Well, among them will be just about anyone who has graduated from university in the past few years. They will have student debt and absent any inheritance they’re most unlikely to have any positive assets. Except, of course, their human capital, that sheepskin which will increase their earning power throughout their lives. It’s just that we’re not counting human capital in our definition of wealth.
But the Equality Trust is using that Cambridge graduate, just about to join Goldman Sachs on squidillions a year, as an example of the wealth inequality – on the downside note, not the up – that must be abolished.
There’s also this:
In the UK, the five richest families own more wealth than 13.2 million
• Over the last ten years the number of billionaires in the UK has almost
doubled and the wealth of the UK’s billionaires has more than doubled.
• The richest 1% of people in the UK owns the same wealth as 80% of the
population, or 53 million people.
• 14 million people, a fifth of the population, live in poverty. Four million of
these are more than 50% below the poverty line, and 1.5 million are
destitute, unable to afford basic essentials.
Switching, as they do, between a discussion of wealth and one of income is a certain sign – that is, not a certain one of many, but one involving certainty – of economic illiteracy.
But the really grand mistake here?
What’s the value of the welfare state? We do have it because we think it makes us all generally richer. And while we can have the most lovely arguments about whether it should be exactly as it is the base idea that a general insurance system does make us richer is going to hold for everyone but Ayn Rand’s ghost.
Think on it. You’ve no assets at all, no cash, no house, no stocks, bonds, shares nor even bank account. You also get free education for all your children, free medical care for yourself and everyone else, the government knocks on your door and proffers free cash – heck, they’ll even pay for your door and the building it’s attached to.
Do you actually have no assets? Or do you have that substantial wealth that comes from living in a welfare state? Quite, and no estimation of wealth inequality that doesn’t take this into account is going to be worth it, is it?
Think on it again. In, say, Zimbabwe there is no welfare state. In the UK there is. Someone who lives in the UK is richer – not has a higher income but has greater wealth – than someone in Zimbabwe or not? And asking the same question along a different axis, someone living now in the UK is richer or not that someone pre-1909 when the welfare state first started to be built?