Populists have hijacked the concept of ‘inequality’ for their own political aims
According to the Momentum brigade, “neoliberalism” has created an impenetrable divide between the “haves” and the “have-nots”, the fat cat boss versus the company’s janitorial staff, the tech entrepreneur versus the small shop owner, the venture capitalist versus the junior doctor.
The inequality between the two groups is eroding society, they say, as the haves keep all the goods and wealth to themselves, and the have-nots struggle to make ends meet.
It’s a compelling story, apart from the critical point that it’s a deliberate misunderstanding of inequality.
If you look at the real world, you’ll notice that most people, regardless of their politics, are generally not opposed to inequality. In fact, the concept of “difference” is a core pillar of many of our virtues, like meritocracy, ambition, and diversity.
We may want equality of opportunity, but we accept that innate skill, hard work, and personal choices lead some people to succeed in certain fields more than others, whether as Olympic athletes, award-winning authors, or top neurosurgeons.
Even when it comes to income inequality, most people understand that we are driven by different motivations. For some, this is money; for many others, it is passion, interest, knowledge, and family.
In other words, you cannot sustain a free and democratic society if equality of outcome is the priority.
So why the uproar?
When people refer to inequality, their complaints are often rooted in the poverty debate. While living standards for those at the bottom is, without question, one of the most important and urgent problems facing society, inequality and poverty cannot be used as synonyms.
They are wholly different issues, and poverty requires radically different antidotes to the ones that would be used to address inequality.
For example, increases in real incomes in the 80s and 90s went hand-in-hand with increases in inequality. This was partly because supply-side reforms, which helped raise incomes across the board, were a big benefit to the relatively well-off.
These reforms could have been abandoned for the sake of maintaining greater equality, but that would have left the poor worse off too.
Furthermore, the welfare safety net is reliant on high wages, which are taxed and redistributed to provide incomes and services for those in need. While the debates rage on about what the size of the welfare state should be, the merits of a basic income, and the efficiencies of state-run services, no one can reasonably question that these provisions are funded by those at the top.
As my colleague Christopher Snowdon has previously pointed out, “income inequality in Britain is average by European standards and lower than average by global standards”, because of its tax and redistribution policies.
Capitalism has the best track record for lifting people out of poverty. The past few decades alone have seen millions benefit. But by hijacking the concept of inequality, Britain’s populists have found a stick with which to beat an ideology they despise, under the guise of helping the poor. It would be a travesty, for the poor especially, if they were allowed to succeed.
This article was first published in City AM.