Wednesday, December 14, 2011

Council Speech on Income Inequality (and some other stuff)

This is my speech on Monday evening at the Newham Council meeting. "Chair, Council, John Gray, West Ham Ward, speaking tonight on my personal views, about why greater income equality is better for everyone in our society and the evidence from the Book “The Spirit Level” to back up this assertion.

While I am sure that all of us in this chamber share a belief in progressive politics, in making our borough and our country a more equal and more just society, often we cannot agree on the way to build Jerusalem, in our green & pleasant Newham. We would all like to see greater income equality, especially for those living in poverty but we need to have a wider understanding on the causes and impact of poverty before we decide how best to tackle it.

A major problem for those who see themselves on the Left of politics is that that many think that socialism generally was discredited by the failure of Marxist states such as the Soviet Union and Eastern Europe. Not only their economic failure but also by the repression and the loss of personal freedoms.

Although the Labour Party itself has always been shaped more by Methodism than Marx, in my view and others, the Left has indeed lost its way and it has also been losing the all important Battle of Ideas to the Right.

This retreat by the Left and the resulting rise of the Neo-liberal Right was the main reason for the disastrous Financial services and Banking collapse in 2008. Which we are still paying the price for today and for the foreseeable future. 

However it is no use for the Left just simply wanting or wishing an alternative economy. It must be based on rigorous economic and empirical research. If the old socialist certainties of nationalisation and control of the means of production, distribution and exchange are no longer - what can take its place? 

The book "The Spirit Level" is I believe an important contribution to a new research based economic alterative. It was written by respected academics Professor Richard Wilkinson and Professor Kate Pickett and was first published in 2009 and an updated version in November 2010. They examined 30 years of national and international research. It is not a “theory of everything” which they are sometimes accused.

What this research found was that there was a clear statistical link in the developed countries of the world between income inequality, health and social problems. The smaller the gap between rich and poor, the more successful society was in terms of health and social problems. Based on this research, if the UK reduced the levels of inequality in our country, we could find increase in life expectancy, decrease in infant mortality; reduced crime (including murder), less mental illness and ill-health, less drug abuse and better educational attainment for our children. 

To me one of the great ironies coming out of the research was that they found that not only was greater income equality better for the poor, but it was also better for the rich to live in a more equal society. The health and social benefits of the rich as well as the poor improve. 

Once you identify the more equal and more successful societies you can then examine what you can do to change our society and make it more equal and more successful for all.  There are two main ways of reducing income inequality:-

1. Smaller differences in pay between the top and bottom earners before tax (like in Japan)

2. Redistribution through taxes and benefits from richer to the poor (like in Sweden)

I won’t go into the remedies since this is a topic in itself but it does seem to me that politically the pay of top executives in the private and the public sector is in the news and being discussed while the idea that we should actively redistribute by higher taxes and benefits is not currently on the agenda. Yet I think that there must be a combination of restraint at the top and support for the vulnerable at the bottom. 

The Right have of course attacked the Spirit Level research because they say it interferes “in the Market”, and that the “Market knows best”. As 2008 showed us, the market is not always right, it does need at times, regulating and moderating in the interests of a better society. A society which again, I stress benefits everyone, the rich and the poor. So let us go on now to win the Battle of Ideas. The Banking crisis for the Right should be the equivalent of the fall of the Soviet Union to the Left. Let us create a new society, a New Jerusalem based on statistical evidence of what works and what doesn’t, not the outdated dogma or wishful thinking of the past. Thank you.
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