The super-rich – the top 1% of earners – now pocket 10p in every pound of income paid in Britain, while the poorest half of the population take home only 18p of every pound between them, according to a report published this week by the Resolution Foundation thinktank, which reveals the widening gap between those at the very top and the rest of society.
Umm, no. No, this simply isn’t true.
Or market incomes it is true: but you will note that we have a taxation system in this country. As well as a benefits system. “Posckets” and “takes home” refers to the income distribution after the influence of the tax and benefits system. Whether you mean colloquially or accurately.
Resolution’s calculations do not include the impact of benefits and tax credits,
So, in studying inequality they’re ignoring all of the things that we already do to reduce inequality. And this is what FCA Blog has called “Worstall’s Fallacy”.
It is of course very interesting to see what the market distribution of incomes is. But before we decide what we might want to do to change it we need to look at the effects of what we already do to change it.
Those effects being substantial. The TUC calculated the figures recently. Top 10% market incomes are 30 times bottom 10% market incomes (by household). That is indeed a large gap.
Once you figure in the tax system, the benefits system, and the public services on offer (notably, education and health care) free at the point of use financed by that tax system we end up with a consumption difference of 6 times.
Which is the more important number? Well, clearly to my mind at least, if we’re trying to look at how we might make consumption more equal via, say more tax and benefits, we’ve got to consider how much we equalise it already through tax and benefits. Just looking at market incomes doesn’t tell us enough.
To give an extreme example. Say that we used the tax and benefit system to actually equalise consumption. But market incomes were still 30x. Could we use that market income difference to argue for yet more equalisation of consumption? Well, no, not really, we couldn’t, could we?
Quite: when discussing inequality we need to take account of what we already do to reduce inequality. Which the Resolution Foundation don’t do thus they’re tosspots.
And do you know what really gets my goat?
In its report, Squeezed Britain 2013, the Resolution Foundation will focus
The report’s not out yet but they’re trailing their results in the press already. So we can’t go and look up exactly how the fuckers are lying to us. They just get to spread their bile across the political landscape without being called on it.
And for that they’re cunts.