There are three striking things about the distribution of income in the UK. Inequality - The top fifth earn on average 6 times as much a year as the lowest five percent.
Welfare dependence - Over half of household income of the bottom five percent takes the form of state support.
Redistribution - Without that state support, households in the top five percent would earn almost 14 times the income received by the lowest five percent.
It is doubtful that the UK can continue to support redistribution of this magnitude. Nevertheless, we should understand the implications of further cuts in welfare - more inequality.
(Data for 2007/8. Source: Households Below Average Income, Department for Work and Pensions. Equivalised household disposable income before deduction of housing costs, using OECD equivalisation scale.)
19 comments:
I think you're mistaken about the graph. It's in quintiles (ie. 20% per segment) rather than just groups of 5%. So it covers the entire population - not just 25%.
Doesn't really affect your main point though.
You're assuming that those affected by the cuts in welfare will do nothing about their situation.
I disagree.
The fact that over 50% of the nation receives state support shows that we are governed by jokers or worse.
You make the point as if the state is supporting the lowest percentile with "magic" money; fiat money maybe but only served on a bed of tax rates well in excess of 50% for the highest, wealth-creating classes.
Personally I'm happy that Mrs. Dibbs gets her hip replacement because Johnny Pinstripes made enough cash to buy his Ferrari; inequality does not necessarily equal bad news when we are all getting richer.
If state doesn't take the responsibility of redistribution of wealth, then the gap of wealth may keep on rising.
Alice no comment on the latest inflation figures ! You haven't gone an done another runner have you?
Nice article, thanks for the information.
Alice. Please come back. I like reading your stuff - even if Im a bit critical at times.
Well Alice, I visit every day and I'm sorry you're not saying much of late - but maybe I can understand why. I've been involved with markets for more than 50 years, a lot of those professionally. Sometimes markets were just particularly incomprehensible to me and they could go on that way for years. Sometimes it's best to leave alone and come back when things are seen with greater clarity perhaps. Hope in your case it's soon.
alice pleae post.us ijiots need some guidance.
Alice,
The graph is, I think, deceptive in this form because it doesn't show taxation, i.e. how much money is already being shovelled out of the upper four bands. The multiples you cite (12 times, 14 times) are not at all real, once PAYE taxation is taken into account.
Taxation is already so high that there are many just into the 40% tax (then add national insurance on top - and pension contributions) for whom there seems little motivation in working hard to seek to improve their income.
B. in C.
Awol or gagged? Can you give us a sign?
A David
Please come back Alice. I miss your excellent blog.
So! Here you are without so much as a by-your-leave!
As a dedicated follower of the two old blogs I was concerned when you disappeared without trace.
Oh well, glad to see you back - but if you bugger off from here, leave a note please...
Come back Alice - we're missing you :-(
nice posting....i really appreciate it
Really great blog. My friends referred me your site. Looks like everyone knows about it. I'm going to read your other posts. Take care. Keep sharing.
Equality is not the same as fairness.
The Government needs to start taking responsibility for this. Otherwise the gap is going to keep on growing. Plus I don't think the government doing house valuation procedures appropriately.
If state doesn't take the responsibility of redistribution of wealth, then the gap of wealth may keep on rising.
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