The Fall and Rise of Inequality in the UK ?

Embed from Getty Images

I can just about remember two generations back in my family and that only on one side.

My Grand Father (Mothers side) was born into the penultimate decade of the 19th Century and died in 1966. He was born in the later years of the reign of Victoria and it was a very different world to that which we inhabit now. It was a world of the very wealthy and a a world of the very poor. Unemployment insurance wasn’t introduced until 1913 and not fully implemented until 1920 when the majority of the working age population became eligible. There was no universal healthcare until 1946.

But over his lifetime the inequality between the population narrowed. A B Atkinson and S Morelli show that the top 1% had a share of total wealth in 1923 of 41.8%. falling to 19% by 1990 (Atkinson and Morelli 2014).  Shares in gross income for the top 1% also fell over this period. Recently this trend has been reversed.

My Grand Father fought in both world wars and reaped the benefits of the social contract forged between the ruling elites and the working man who defended their right to rule by fighting foreign foes. In return the rulers promised a world fit for heroes. He benefited from American loans after the war which helped to re-build the UK. He wasn’t by any means wealthy but he had a good job working as a compositor for the Cambridge University Press and life after the Second World War at least was comfortable.

My Father, born in 1926 really reaped the rewards of the post war boom. He never became, in his words, a “hero” having joined the Royal Air Force at the age of 17, lying about his age to get in. The Air Force sent him to South Africa to be trained and by the time he was ready the war was over. It was a genuine disappointment for him that he was not able to do his bit.

What he received instead was a scholarship to Cambridge, courtesy of being a demobbed local boy and a solid career for life with Lloyds Bank with a final salary pension and membership of the golf club. Britain was booming at least until 1970. Houses were affordable and the prices of consumer goods were falling all of which narrowed the wealth gap.

The early 1970’s were dismal. A transition phase for Britain both politically and economically. Plagued by high inflation, unemployment, Trade Union strife and violence. From the casual Saturday afternoon skirmishes of the football hooligan to the more destructive bombs and shootings born from the political unrest in Northern Ireland. The countries of the Middle East suddenly realised the value of what was under the sands and the price of energy rocketed further reducing Britain’s industry to virtual rubble.

Me, the third generation, formed part of the do it yourself work generation. There were no jobs for life with promotion through the ranks but escalating changes from employer to employer. Pensions were the responsibility of the individual but few took up the savings bug preferring to put cash into property and family and leave the future to itself. From the 80’s on prosperity generally increased. There were a few glitches in the system notably in early 1980 and in 90/91 but these were due more due to national political decisions rather than external factors and in general prosperity for all was on the up until the catastrophe of 2008 which saw a world wide contraction.

The contraction in 2008 from which we are still recovering definitely saw a change in wealth inequality but that was inevitable. But I am not sure it is in reality necessarily a permanent upward trend. Certainly the link between the ruling elite and the rest of the the population which was strengthened via two World Wars has gone over the past 70 years and there is no need for the new elite to buy the co-operation of the rest of us.

I suppose that is the point. It is not that inequality has got wider more that the nature of the inequality has changed. In Edwardian times the rich were the landowners, industrialists and bankers and the working class accepted that these groups were different from them. That there was a hierarchical reason for the disparity in wealth. Today the inequality lies not in a distinction between classes. Today the top employees of a bank have phenomenal wealth compared to that of the clerk on the till but they are both still employees. Musicians, sportsmen film stars achieve phenomenal wealth but are essentially the same people from the comprehensive schools as those those who work in shops and offices. Without that sense of difference the perceived inequality is all the more acute for those of the same backgrounds as those who “make it”.

Finally the rich are far more global in there movements. No longer do the rich remain in their country of birth and no longer do the rich have a sense of place. They choose to live in places that minimise their tax and maximise their safety. There is no longer the view that a rich man should contribute to the well being of their nation of birth if they don’t want to and it is that which creates a sense of inequality. There has always been inequality and I am not convinced that the overall levels of inequality have increased dramatically since the Victorian era to the present day. What has changed is the nature of that inequality in that it seems far more randomised than in previous times.