Economic inequality: The biggest issue of our generation.3 min read
Recently, Oxfam released its annual report on the distribution of wealth around the world. Last year, they found that 35 people in the world had more money than the bottom 50% of the world’s population. That’s already a depressing number, but this year they found that only eight people had more than the bottom 50%. That’s eight people with more wealth than the poorest 3.5 Billion people in the world.
So how is the UK doing? Studies show that since the credit crunch in 2008, there is only one country in Europe.
Greece, with slower real terms wage growth than the UK. That’s not the story you get if you look at our GDP figures though. Our GDP is higher than it’s ever been before and we are now the sixth richest country in the world. That tells us that those at the top are pocketing more than they ever have, whilst the majority of the population, a majority of the middle class as well as the working class, are being squeezed.
Since 2010, homelessness has doubled, the number of food banks is growing all the time, and the number of people who are working but still face relative poverty is rising. Yet large companies whose profits keep growing are taxed less, so there is less money in government pots to pay for the services people need, like affordable housing or tax credits.
The theory behind cutting taxes on large corporations is that the money saved by corporations will be spent on their workers, or on lowering the prices of their products. This is known as trickle-down economics. In practice though, this doesn’t really work. The savings typically end up either in top executives’ pockets or they go into funding company expansion.
So how do we fix this? One of the best methods being proposed is something called a wage ratio of 20 to 1. This would mean that the person making the most in a company could not make more than 20 times the lowest paid workers wages. This would mean that a CEO could still get a pay rise when their company does well or when taxes are cut, but everybody else’s pay would also have to rise.
Another less radical proposal is boosting the minimum wage to a real living wage. Yes, we do have a so-called living wage in this country, but at the moment it only
applies to people over the age of 25 and, according to the Living Wage Foundation, it’s still at least £2 lower than it should be. Opponents of a minimum wage increase, say that this would cripple small business, drive away larger businesses and cause inflation to skyrocket. However, there is evidence to suggest that this wouldn’t happen. A couple of years ago in Seattle, they doubled the minimum wage overnight. Initially, yes, there were problems and a few businesses struggled. However, after a couple of months, most businesses noticed a dramatic increase in spending with next to no inflation. This is also true in California where the minimum wage has been increased twice in 4 years.
At the end of the day, the problem of economic inequality isn’t going away and will only be felt more by the poorest in society with stagnant wages, more job insecurity, more cuts to benefits and public services, because of less tax being paid. If we don’t want to see a massive decrease in living standards in this country, we have to do something about inequality.