Only the Rich Get Richer

BY NICHOLAS PEARCE

There are basically two camps. In the (metaphorical) red corner, are those that claim the poor are getting poorer either because income is increasingly concentrated in the hands of the few or because standards of living are getting worse for those with the least money – or both. Capitalism is unfair.

In total contradiction, there are those that say the poor are getting richer because we live in a country where income doesn’t just go to the richest. That Capitalism, albeit imperfect, works.

Who is right?

The ONS says the Reds are wrong while the Unions say the Reds are right. So, let’s stay we’ll clear of statistics which can be manipulated either which way. Instead let’s look at the rough graph over a long period of time (a thousand years should do) which shows the effects of capitalism:

gdp-per-person

The single greatest story of human achievement of the past 2,000 years is the dramatic rise in living standards of the past 200 years. It’s an astounding ascent driven by innovative, entrepreneurial capitalism. Free enterprise. Economic freedom.

The Reds would argue that this great ascent was built on the backs of the workers. Really? Then how can they explain the massive decline in muscle-driven, hard and repetitive work?

020916deloitte1

Ah yes, say the Reds, but incomes have increased ON AVERAGE because the rich have got richer but the poor are still poor. Look at groups like the Joseph Rowntree Foundation who claim poverty in Britain is increasing.

The poverty measure used by Rowntree is the commonly-used relative poverty measure, which says a family is poor if they live on less than 60 per cent of median income. In the financial year 2012/13, this meant £130 for a single adult, £224 for a couple without children, £175 for a single parent with one child, and £364 for a couple with two children. The relative measure can easily be criticised because it means that when average incomes fall, fewer people are said to be in poverty. However, it does chart accurately how different groups of people are doing compared to each other. When you add tax to the figures the following graph is achieved:

what-is-the-spread-of-incomes-in-the-uk-2014-15

Which leaves us with the real bugbear of the Left right now: income inequality.

Despite the very rich being taxed massively compared to the rest. (This is the red rag the likes of Labour’s Angela Rayner uses to attract her bulls to the Labour Party.) Yet this again shows that income is being redistributed to a point where the poorest 50% are receiving more than they earn before tax.

Historically the worst demagogues demonise a group they don’t like, such as the rich, for the purposes of political gain and power lust.

The modern day progressives rely on envy and coveting to justify raising tax rates. You can seldom find a copy of the Guardian, Observer or other progressive leaning publication that does not cite income inequality as a threat to society; as a reason for painting a picture of capitalism failing.

Living on less than £10,000 a year must be tough as hell but building up the poor into wealth by giving them food banks and benefits – Ken Loach style – is a recipe for disaster.

Over the past two centuries, growth has increased living standards in the West unimaginably quickly. Many more babies survive to adulthood. Many more adults survive to old age. Many more people can be fed, clothed and housed. Much of the world enjoys significant quantities of leisure time. Much of the world can carve out decades of their lives for education, skill development and the moral formation and enlightenment that come with it. Growth has enabled this. Let’s keep growing. …

Growth facilitates the flourishing life. By creating a dynamic environment characterised by increasing opportunity, growth gives the young the opportunity to dream and to strive. And it gives the rest of us the ability to apply our skills and talents as we see fit, to contribute to society, to provide for our families. A growing economy allows individuals to increase their living standards, facilitating economic and social mobility.

How could anyone not be a great believer in competitive, market-driven capitalism?

sowell

 

 

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