12 thoughts on “The rich versus the super-rich”

  1. Posted 16/02/2015 at 11:18 | Permalink

    Very useful piece, Chris. I like Robert Peston, but you are right to suggest that he will be among the rich who seem to resent the super-rich. Paradoxically he will suffer from measures to screw more money out of those at the top. On his salary he will be paying the revived 50% tax rate, while his house in Muswell Hill will probably attract the mansion tax. So he’s being altruistic, I guess.

  2. Posted 16/02/2015 at 15:55 | Permalink

    It always cheers me up to see an optimist in action. Chris Snowdon is indeed an optimist if he thinks that providing his intellectual opponents with facts about real levels of income and income shares will make the slightest bit of difference.

  3. Posted 17/02/2015 at 09:01 | Permalink

    Interesting piece. However, there is a lot of data but not all of it is referenced. For example: “Contrary to popular belief, the one per cent’s share of income fell between 2007 and 2011 (from 15.44 to 12.93 per cent).”. There is no source referenced for this figure. Where does this come from and to where does it apply – just the UK or the world?

  4. Posted 17/02/2015 at 14:23 | Permalink

    HJ, it’s from Thomas Piketty’s income databse, with link in the previous paragraph.

  5. Posted 17/02/2015 at 21:57 | Permalink

    I find it extremely worrying that the BBC’s Economics Editor seems willing to give credence
    to such simpliste statements about the recent evolution of income distribution in the UK as:
    ‘the tax-avoiding wealthy are scoffing a growing share of the cake…it’s becoming harder and harder
    for governments to pay for public services…’. This is not serious economic, and politically-unbiassed,
    reportage; as your blog-piece has so clearly exposed.
    This matter is very important, because the majority of our voters are not entirely clued up on
    Gini coefficients (etc); and often do rely also, to some extent, on (supposedly) “unbiassed” reportage from public-service news providers such as the BBC and Channel 4 for some instruction on such complex
    matters.. which should be bereft of both ideological slant and misreportage.
    I think Robert Peston (and/or his senior managers) should reply formally about these matters,
    in a statement issued to the IEA and publicly.

  6. Posted 18/02/2015 at 18:43 | Permalink

    Great article, most of which I agree with wholeheartedly. My only question is over the remark you end the article with. This is, “So long as the cake is getting bigger and our share of it is not getting smaller, why should we care about the rivalries and resentments of those who earn a lot more than us?”

    I agree with this, but wonder what your opinion is of a situation where the cake is getting bigger overall, but for many the share is getting smaller, or at least not rising. In America, I think I’m right in saying that median incomes have stagnated in recent decades. In light of this, and if your piece was a USA-centric one, would your conclusion change? If everyone’s income is rising, but inequality is rising, this is not as contentious as a scenario where inequality is rising AND some people’s incomes are stagnating.

  7. Posted 22/02/2015 at 12:21 | Permalink

    Excellent piece, but I have two questions: (i) Are your ONS decile distributions pre- or post-tax and benefits ? Looking at the numbers, my strong guess is pre. However left-leaning you are, surely what is important are post-tax and benefits incomes, since only in a planned economy is a Government able to determine pre-tax incomes. My second question, which I guess is too big to tackle here, is why the top 1% are moving up so strongly in income share? If it is globalisation and technological changes to production (which is my guess), then no Government can change that – so we had better stop moaning and find a way to live with it.

  8. Posted 22/02/2015 at 14:35 | Permalink

    I couldn’t care tuppence about inequality. What does it matter to me or my neighbour if a handful of Bransons or Gateses get richer, or a bigger share of global income, or whatever?
    I care about my standard of living, for which I am grateful. I care, not quite as much, about other people’s standard of living.
    But this is what I think:
    1. that if all we care about is getting richer, we will not achieve anything worth having.
    2. that our need for good social relationships is far more important than inequality or so-called poverty.
    Let’s shut up about money and talk instead about good schools, good healthcare, good communities, good culture, good living. Let’s talk instead about values.

  9. Posted 23/02/2015 at 15:11 | Permalink

    Good piece. A couple of queries:

    – Don Boudreaux (or maybe the other dude at Cafe Hayek, I forget…) consistently bangs on about changes in composition of households, in particular household size. Does this have any implication for the data you present? Presumably lower strata divorce/ fecklessness rates and assortative mating in the upper tiers means that it could even rosier than you suggest.

    – How are incomes adjusted for? It strikes me that a large amount of the resentment towards the 1 percent/ “the rich” is influenced disproportionately by London property prices. It’s easy to feel very poor in London on a relatively decent salary given inherited expectations of property and location. Is there any methodology to attempt a regional scaling of income share to better reflect costs? Anecdotally, my old man picked up a three bed terrace in Highbury on a median salary having been bunged the same again in 1982 by a local council worried about dilapidation in the housing stock, whereas now the same could possibly purchase a one bed flat two zones further out with no easy money from local apparatchiks. .

  10. Posted 23/02/2015 at 16:00 | Permalink

    Neil, the figures are for disposable income so they are after benefits and income tax, but before indirect tax. I agree that globalisation is a big factor for the increased share going to the top 1% and top 0.1%.

    Little Tripoli, the figures are equivalized so they are adjusted for household size.

  11. Posted 26/02/2015 at 16:02 | Permalink

    The maths doesn’t work with Picketty’s and ONS numbers together. Picketty’s top 10% figure for 2007 is 42%, the ONS is 15%, so comparing Picketty’s top 1% figure to the ONS top 10% is not going to yield useful results.

    I suspect Picketty’s figure is a pre-tax, pre-benefits figure.

  12. Posted 27/02/2015 at 13:04 | Permalink

    Anon,

    That is a good point. Piketty’s figures do seem to be very different from the ONS’s. There is, however, other evidence that the top 1% and top 0.1% are pushing away. The IFS, for instance, finds that the 99/90 measure has been rising since 1994 whereas other measures of inequality have not.

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