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.


Anonymous said...


You say "many think that socialism generally was discredited by the failure of Marxist states such as the Soviet Union and Eastern Europe." I'm sure what you really meant was "Leninist states". Marx wouldn't have recognised the Soviet Union and its satellites as having anything to do with his thinking.

You go on to say that "the resulting rise of the Neo-liberal Right was the main reason for the disastrous Financial services and Banking collapse in 2008."

Quite so, but you fail to add that the leadership of the Labour party was equally in thrall to that neo-liberal thinking. The pro-City, pro-market philosophy of Thatcherism was embraced by Blair and Brown, and it led directly to the failure of regulation that allowed casino banking to flourish, with the consequences we are now paying for.

We see clearly from Cameron's antics in Brussels last week that Britain remains a country run by, and in the interests of, the bankers. Labour's problem is that it has to distance itself from its own recent history and articulate a credible alternative vision for society. It needs to stop being "intensely relaxed about people being filthy rich" and start getting angry.

John Gray said...

Hi Macuser
I am not a Marxist so I don’t think that I am the right person to decide whether the Soviet Union was ever once a Marxist state, a failed Marxist state or not. I think that many people at the time and since did genuinely think it was. However, I still think it is true that “socialism” was damaged by association with the Soviet Union.

I think with hindsight that practically the whole Labour Party (not just the leadership) made a huge mistake over the role of the market. Yet, due to the “failure” of the left to come up with a practical and convincing alternative that the Great British public would support, then perhaps it is no real surprise.

Yes, Labour needs to come up with a credible plan and I hope no-one of consequence would ever never say anything so silly about the “filthy rich” again (I won’t hold my breath).

Getting "angry" won’t achieve very much. We need a plan that will convince people. We need to convince them that to support a rebalanced and make a genuinely mixed economy of strong accountable well funded public services, publically owned natural monopolies, mutual’s, co-ops and properly regulated private businesses. We need effective trade unions and progressive taxation.

John Gray said...

ps I’ve put the world to right and I am now going to see Jessie Jackson and wish him a happy 70th birthday.

Anonymous said...


Maybe 'angry' is not quite the right word, but I think you know what I mean.

Perhaps, to channel Jesse Jackson, they need to articulate a righteous sense of injustice. And a clear vision of what a better and more just society would look like.

John Gray said...

Hi macuser

Jesse Jackson certainly knows how to articulate and hold his audience but he also puts forward arguments that people understand and are receptive towards.

John Gray said...

Hi rude anon

Please resubmit your comment. I will put up with loads of silly nonsense but do not try and post offensive swear words on this blog.