Inequality: the slow revolution

In an extract from his new book, Inequality and the 1%, Danny Dorling argues that we need a nonviolent war of attrition against the rich

December 1, 2014 · 10 min read

danny dorking cover 150 wideGet a free copy of Inequality and the 1% when you buy a Christmas gift subscription to Red Pepper.

In the world’s most affluent and unequal of countries, those at the top often say that people are poor because there are too many of them: either too many being born or too many immigrating. This is a common refrain of the elite. David Attenborough recently put it a little more subtly: ‘We are such a densely populated country… The world is only so big. You simply can’t go on increasing forever, so something’s going to stop it. Either we can stop it or the natural world will stop it for us.’ David is wealthy enough to be a member of the 1 per cent. When he says ‘we can stop it’, he may not have a very wide conception of ‘we’. I think we can stop inequality rising, and I know population growth is rapidly slowing; but part of stopping the crises to come will involve confronting the views of many people in David’s economic position.dorling1Number of $100 million households in the world.

Research published in Behavioural Ecology finds that elites like the 1 per cent can emerge when a lack of free-flowing information gives a few a growing advantage. The effect of such rising elitism on the group as a whole is doubly harmful. It is not only that less good gets done as the gaps between us are widened, but that ignorance is fostered. Those with power simply know very little about the lives of the majority. They can come to see ‘the masses’ as a seething sea of out-of-control bodies; but, looking up from below, the powerful appear to have very poor vision.

Technically speaking, rising elitism has harmed us all in the past because ‘the loss of efficiency of stratification is due to the lengthened information channels, whereas the additional loss of efficiency in the elite network is due to the information bottleneck emerging between the elite clique and the rest of the group’. The result is a rising culture of entitlement that is damaging to all. Increasingly, the rich feel that they are entitled to as much as they can possibly get away with – that they are entitled to say outrageous things and that no one else is entitled to anything much.dorling2What effect will changes to tax and benefits have on children?

In the US and UK, a culture of entitlement among the richest has arisen that is not as strong in other rich nations. Elitist views and behaviour are now seeping into the mainstream, so that even the poor are heard to call for lower taxes. That is how deep the confusion goes. A 2011 study of 18 OECD countries found that the optimal top tax rate for the marginal earnings of the very rich might be over 80 per cent. With that, a country could increase productivity (which could be green productivity), while ‘no one but the mega rich would lose out’. The authors of the study show top tax rates to have fallen since the 1970s and the income share of the richest 1 per cent to have grown in almost perfect correlation.

Countries that have not reduced top income tax rates since the 1960s have prevented their elites from taking too much. It is clear that higher taxation can reduce greed at the top more effectively than any other mechanism. Put simply, if taking more for yourself gains you very little (because of what the government takes), it pays to let that money go to people paying much lower tax rates. High taxes at high incomes help the greedy to be less greedy.

The alternative is to see the 1 per cent become richer and richer, pollute more, and lecture the rest of us on our behaviour, while they plot ever more elaborate ways of behaving badly. This might include taking personal trips into space – which makes flying private jets to Necker Island look like environmental awareness.dorling3But a new mood is developing. Even the Wall Street Journal asks: ‘Why do Leonardo DiCaprio and Richard Branson lecture us about carbon consumption while plotting trips to space?’

There are many positive signs that people are coming to realise that the rich must be helped to take less. But we face a major problem that often hinders progress: self-congratulation. In order to achieve long-term improvement, it is necessary to retain a sense of anger. Stop to celebrate one small victory (the locksmiths in Spain, the people’s parliament in Iceland, the land tax in Ireland, new forms of protest in the US) and, before you know it, the greedy have snatched back that little part of the wealth you had liberated, and found another tax loophole.

A war of attrition

What we need is a slow revolution. The 1 per cent cannot control itself. It is easy to blame its members, but blaming them may exonerate others who, while not having been so greedy themselves, could have acted and could still act to curtail the greed of others.

To gain entry into the 1 per cent often requires a certain lack of self-restraint. It is up to the rest of us to control these people – for their own good as well as ours. We can document their greed, the size of their yachts, the frequency with which they fly and the pollution caused by all the expensive vehicles they use to move around as fast as they can; but documentation is not enough. This stupidity needs to be halted.

In the past it has not been revolution, in most cases, but war that has quickly relieved the 1 per cent of much of its assets. Today a nonviolent war of attrition on concentrated wealth is needed, and it is beginning.

In the US in 2013, the president finally acted. Top tax rates for the richest 1 per cent were increased from 35 per cent to 39.6 per cent of income received over a high threshold, and capital gains tax was increased from 15 to 20 per cent. There are now many calls to increase these rates even more, raising capital gains taxes up to a maximum rate of 50 per cent for the very richest Americans. Many of these calls are coming from much nearer the mainstream than has been the case for decades. Celebrate ever so slightly, have a beer, smile a bit more – but above all else do something to help build the momentum.dorling4Why did the US president act in 2013? One answer is that in the US it became clear by the summer of 2012 just how enormous was the fallout from the financial crash. Median wealth plummeted over the years 2007 to 2010, and by 2010 was at its lowest level since 1969.

The inequality of net worth, after almost two decades of little movement, was up sharply during the late 2000s. Relative indebtedness continued to expand during the same period, particularly for the middle class, though the proximate causes were declining net worth and income rather than an increase in absolute indebtedness.

In fact, the average [new] debt of the middle class (in real terms) plunged by 25 per cent. In other words, the middle were becoming poorer through no fault of their own – and falling into ever greater debt to the richest despite not having asked to borrow more. The calls to curtail the excesses of the 1 per cent in the US are not made now in obscure outlets, but – at the extreme – in Forbes, the favoured journal of the rich. Even Forbes writers who have been hedge fund managers, and have headed the Fortunes and Options Division of Lloyds TSB bank, can see what is coming and say: ‘We can’t afford another Dust Bowl.’

It is not hard now to collect hundreds of calls for change coming from all directions, but will they be enough? A slow revolution is hard to sustain, and it has many enemies.

Cabinet 1 per centers

In the UK the prime minister was a member of the 1 per cent by dint of his wealth long before he entered parliament. He presides over a cabinet containing more members of the 1 per cent than has been the case for decades, and has appointed a series of close advisors not just from the 1 per cent, but often from his own school. Hardly surprisingly, he does not explain to his electorate how the business strategies of his friends have impoverished the middle of British society.

The leader of the opposition, Ed Miliband, takes conspicuous care not to enrage the 1 per cent. Instead, he speaks very tentatively. The Guardian summed up his view as follows: ‘The early signs, Miliband claims, are that the greatest beneficiaries of a recovering economy will also be a privileged few. Rewards in the banking sector in London grew nearly five times faster than the wages of the average worker last year. He argues this is not an accident, but a function of how the coalition views growth can be achieved.’

Such carefully worded statements are more than a generation away from Denis Healey’s promise of February 1974 to ‘squeeze property speculators until the pips squeak’ – and Healey was to the right of Labour at the time.dorling5Change in the reported number of social care recipients in the UK.

Gradual transformation

But successful social movements in the past, rather like the victors in wars, wrote their own history, and may have overstated the importance of overt politics. Campaigners want to say why they mattered; academics want to try to influence policy, and so look for evidence of their personal impact.

But much change consists of gradual, almost imperceptible, transformation – a slow revolution of the wheel, a change in the mood, a subtle shift in what becomes morally acceptable, one that is almost never due to any great leaders or great speeches. Gradual transformations in societal motivations are not easily monitored. It is often not obvious how they occurred, and usually difficult to quantify their extent.

Today, another such transformation may be underway – a slow revolution in attitudes to greed. The highest-ever level of concern about rising inequality in Britain was recorded by Ipsos MORI in their winter polling of 2013. Trends can form without the necessity of a lobby group or an organisation trying to profit from them. ‘Societal motivation’ and ‘changing fashion’ are almost synonyms.

By December 2013, further polling evidence revealed that most UK voters believed any recovery was likely to favour the wealthy few rather than ‘families like them’, and that a majority favoured taxing the rich more rather than further cuts, especially to protect key services like health and education. By that year we were no longer surprised that the majority thought this way – only that the rich still did not get it.danny dorking cover smallGet a free copy of Inequality and the 1% when you buy a Christmas gift subscription to Red Pepper.

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