“You’ve never had it so good” has never been so wrong: Review of The Cost of Inequality

Every so often somebody comes along to tell us what we should all already know, but are often charmed into thinking the opposite – namely that we shouldn’t keep calm and carry on, because everything is not fine.

To be optimistic about business as usual, you really have to choose your time well.

In 1957 the Conservative prime minister Harold Macmillan told Britons that “most of our people have never had it so good.” When he said it, Britain was in the period we know as the managed economic period of 1950 – 1973, where UK unemployment averaged 1.6 per cent.

Additionally, there was the post-war boom to the global economy which rose living standards. Of this he was sure the market had it spot on, attacking the doctrinaire nightmare of central planning and nationalisation, and recalling visits around the country, the farms, the industrial towns – a reminder of great prosperity, for which we can all be grateful.

There were wages freezes in 1961 to curb inflation, but altogether it was no political suicide to boast about how we can all share in the glory of economic happiness.

Probably not a good time to try that trick is when we’re in the middle of a recession. That was what Lord Young tried in November 2010, telling us that the “vast majority of Britons have never had it so good” – echoing Macmillan.

The former enterprise adviser to the PM described the yearly drop of 100,000 public sector jobs as “the margin of error” in an otherwise strong jobs market (one year later the OFT revised original figures for public sector job losses up to 710,000 by 2017) and alluding to low interest rates and the gloomy looking economy he anticipated that in time “people will wonder what all the fuss was about”.

Suffice it to say that still is not the case. In fact, to really show it how it is, about a week after Lord Young had made his gaffe, Warren Buffett, the American business magnate and billionaire, called on the government to “tax us [rich people] more” going on to say “we have it better than we’ve ever had it.”

The rich, throughout the crisis, have stayed rich, the poor are getting poorer, poorly regulated financial markets have failed and yet spineless governments haven’t the guts or the courage to do anything about that – and so it will remain unless some real reform is done.

This is the appeal of Stewart Lansley in his great new book The Cost of Inequality.

Not only have we witnessed a marked lowering in the material share by the majority of the populus, both in the UK and US and other places, but the undeserving rich are getting richer, and their money becoming dirtier.

Corporations with assets worth more than the wealth of the countries they reside in should give us pause, but the troubling fact of the matter is – and for all the talk of a more moral capitalism – nothing is being done to seek out alternatives.

As Lansley rightly points out, unfettered markets are still the choice of the day for UK and US business schools and the Treasury still recoils at policies that might distort the usual running of the market.

Personal fortunes, we’re reminded, at the top have risen to before World War Two levels, while living stanadards for the majority of Britons have dropped.

The era of deregulation, after the one which Macmillan presided over, created big money, concentrated into the hands of the few (Lansley points out that in 1990 to be on the list of richest 200 UK residents you needed £50 million, now since 2008 you need £430m; a near ninefold increase) but not smart money or investment.

Real incomes in the UK have all but stagnated since 2005, while in 2010 city bonus pools returned to pre-crash levels, and the average pay of chief executives in Britain’s largest companies rose by 55% in the firsty 6 months of 2010.

Through the policies of Thatcher, and maintained over the last 30 years, manufacturing has dropped significantly (even in the boom years from 1997 to 2007 “a further 1.5m manufacturing jobs were lost in the UK” as Lansley points out), while the service industry has filled the gap, decreasing wage levels and offering short-term, low-skilled (even if highly skilled workers are doing them) and constantly vulnerable jobs that places like Tesco can offer to people for the promise of their job seekers allowance now (well, the Tories can’t get rid of the minimum wage, so they have to go about it in more creative ways).

The financial sector, however, has grown, but to scant evidence that Britain is a better, more productive country for it. City greed has grown to colossal levels, and has created an economic culture that, in the words of one Resolution Foundation report, “allows leading City bankers [to] actually destroy … £7 of social value for every pound in value they generate.”

A different picture once upon a time, as Lansley shows us.

Before Big Bang (deregulation of the financial markets in 1986 – a cornerstone of Thatcher’s reform programme), UK merchant banks paid bonuses of around 3-4 per cent of a salary, while some firms’ bonuses took the form of a Christmas hamper. In 1997 the city bonus pool hit £1 billion for the first time.

A decade later that figure was £9 billion. It was concentrated to a tiny proportion of the City’s 350,000 staff. 4,000 receiving £1 million; a few hundred over £5 million; and twenty-odd over £10 million.

Funny to think now that the city were once worried about Labour coming back to power in 1997, but they didn’t fear for very long. Lansley observes that while Gordon Brown concentrated on the finer details of the banking industry, Tony Blair became a spokesperson for the city, promising a continuation of light touch regulation, and going public on New Labour’s flirtation with the moneyed.

Of course back then Blair didn’t care how much David Beckham earned and Peter Mandelson was relaxed about the filthy rich. Now we know high pay impacts upon low pay, and that pay gaps, which widened under Labour, are quite unhealthy for a good society. Furthermore, Mandelson has swung full circle, now admitting that he isn’t relaxed about the filthy rich anymore.

So, the evidence is there of a failed system. What to do?

In his essay for a recent Fabian Society pamphlet The Economic Alternative, Will Straw gives us reason for optimism. As world wealth starts to disperse, particularly in the so-called BRIC countries, there will be more reason for the UK to grow and export the things it is good at to more people – a reason why the unravelling of US economic hegemony is not all doom and gloom for the UK.

Now Britain has reason to develop its skill set in aerospace and pharmaceuticals, and new areas such as tourism and biotechnology. There will be greater need to invest now, in order to reap gains later, and grow jobs around the country rather than having concentration of jobs and wealth, with few stakeholders, in London and the South East.

This is all vital. And the exporting of financial services plays a key role in this as well. So what must we do to ensure this sector works and works for the many, not the few.

Lansley, in concluding his book, points out the Scandanavian utilisation of flexicurity (portmanteau of flexibility and security).

What should be pursued in finance, as well as other areas, are sensible interventionist policies, designed to ensure the system works, and avoid failures to spot risk in deregulated pockets of the city. Flexicurity also feeds into a system focused on worker security, technological advancement, and employment generation – such that we haven’t seen in the UK since the wide-opening of the markets.

If it is true that we’ve never had it so good, then this can only mean we’ve previously only ever had it terrible.

Lansley intricrately, and with a great wealth of research, shows us the great failure of neo-liberal politics, and howit is has contributed to today’s normalisation of crisis (an expression of which, incidentally, is thinking we’ve never had it so good). But he also develops a reason to dispute TINA (There is No Alternative). Perhaps now politicians will listen to what has been obvious for the past 30 years.

See also:

• Class, inequality and the state at the Fabian conference – Carl Packman, January 17th 2012

• Inequality must be ended to prevent another financial crisis – Stewart Lansley, January 11th 2012

• For our economic health we need a one-off tax on the one per cent – Stewart Lansley, December 10th 2011

• Everything you know about the ‘Thatcherite consensus’ is wrong – Stewart Lansley, October 6th 2011

• Long-term decline in wage growth to blame for financial crisis – Nigel Stanley, November 12th 2009

http://twitter.com/yrotitna/status/171162965331017729 Yrotitna

"You've never had it so good" has never been so wrong: @CarlRaincoat on Stewart Lansley's The Cost of Inequality: http://t.co/UAth6Iie
http://twitter.com/therightarticle/status/171162994544345088 Michael

“You’ve never had it so good” has never been so wrong: Review of The Cost of Inequality I Left Foot Forward – http://t.co/qvuyu2Ok
http://twitter.com/maximmanchester/status/171164135155957760 Max

“You’ve never had it so good” has never been so wrong: Review of The Cost of Inequality I Left Foot Forward – http://t.co/qvuyu2Ok
http://twitter.com/extraditiongame/status/171164512509100032 Extradition Game

"You've never had it so good" has never been so wrong: @CarlRaincoat on Stewart Lansley's The Cost of Inequality: http://t.co/UAth6Iie
http://twitter.com/politicalplanet/status/171164604624408576 Political Planet

“You’ve never had it so good” has never been so wrong: Review of The Cost of Inequality: Carl Packman reviews St… http://t.co/ALiho7AO
Anonymous

Given that this has come after a long period of Labour power, then its pretty obvious that what Labour did was the cause.

1. Acceptance of people living on welfare. With large numbers of people living in families where no one has worked, they will never be ‘rich’. [They are rich in terms of expenditure when you tot up what is given to them free]

2. Taxation. Becoming rich means spending less than you earn, and investing the surplus. If you tax people, particularly the poor, then they spend all they earn, and they can’t save.

3. The state pension is also an example of this. If someone retiring on 26K (median wage) had invested their NI in the FTSE they would have had an index linked pension of 19K. Instead they have a poorer CPI linked, not fully joint life pension of 5K. The reason is compound interest.

The state took their money spent it and didn’t invest it. Hence no compound interest. Give that charges which can be forced down in the case of the city will take 25% (compound interest again when returns are low), the comparison is even more dire. Get a pension nearly 400% bigger by avoiding the state. Ah yes, you don’t get a choice.

Look too at the effect on welfare. If people had 19K a year, indexed link, Nearly 40K if both worked, would they need welfare? No.

What about poorer people? Yep, they would be better off too. The state has made people poorer. The state has increase inequality.
http://twitter.com/stevebatchelder/status/171165764332699648 steve batchelder

“You’ve never had it so good” has never been so wrong: Review of The Cost of Inequality I Left Foot Forward – http://t.co/qvuyu2Ok
http://twitter.com/patronpress/status/171166057501954048 Patron Press – #P2

#UK : “You ’ve never had it so good ” has never been so wrong: Review of The Cost of Inequality http://t.co/vvPTjH8C
Anonymous

Next, look at the change to a funded pension setup. Lots of money for investment. Ah yes, the state has huge debts so it won’t allow people to keep their money and invest it.

The borrowing grew 150 bn a last year. That is 150 bn plus interest not available for investment.

The off balance sheet debts grew 350 bn last year. That’s another 350 bn that the state is going to have to extract from the population to keep the ponzi going.

Those sums are too large to extract given it is already having trouble extracting 550 bn a year.

Simple conclusion. If you rely on the state for your pension, [lots of gilts in pension, particularly annuities where it is forced], you won’t get the money back.
http://twitter.com/anexpressionfm/status/171166485941719041 Cris Robertson

#UK : “You ’ve never had it so good ” has never been so wrong: Review of The Cost of Inequality http://t.co/vvPTjH8C
http://twitter.com/macinpoole/status/171166494963666944 malcolm

"You've never had it so good" has never been so wrong: @CarlRaincoat on Stewart Lansley's The Cost of Inequality: http://t.co/UAth6Iie
http://twitter.com/dorisdapple/status/171166578480644097 Greta Krendel Lyons

http://t.co/stcSGxfI 1957 born in rented rooms, both my parents worked but we were poor. Fast forward 2012 what's changed for the poor?
http://twitter.com/carlraincoat/status/171170817588211712 raincoat optimism

"You've never had it so good" has never been so wrong: @CarlRaincoat on Stewart Lansley's The Cost of Inequality: http://t.co/UAth6Iie
http://twitter.com/ellerymitten/status/171170887058456577 ellery

RT @leftfootfwd: "You've never had it so good" has never been so wrong: Review of The Cost of Inequality http://t.co/5uhCHZuo
http://twitter.com/durhamcub/status/171171737701056512 Martin Steel

"You've never had it so good" has never been so wrong: @CarlRaincoat on Stewart Lansley's The Cost of Inequality: http://t.co/UAth6Iie
http://twitter.com/pulpark/status/171171858488635392 Pulp Ark

“You’ve never had it so good” has never been so wrong:… http://t.co/WGvPwHVu #Sustainable_Economy #cost_of_inequality #muslim #tcot #sioa
http://twitter.com/darealmaozedong/status/171172345094995968 mao zedong

#UK : “You ’ve never had it so good ” has never been so wrong: Review of The Cost of Inequality http://t.co/vvPTjH8C
http://twitter.com/scarlett16/status/171174514586157056 Donna Govan

"You've never had it so good" has never been so wrong: @CarlRaincoat on Stewart Lansley's The Cost of Inequality: http://t.co/UAth6Iie
http://twitter.com/rosaross16/status/171176034526441472 Rosalyn Ross

“You've never had it so good” has never been so wrong: Review of The Cost of …: To be optimistic about busines… http://t.co/F2g9Qkmm
http://twitter.com/paulageraghty/status/171180802938376192 Paula Geraghty

#UK : “You ’ve never had it so good ” has never been so wrong: Review of The Cost of Inequality http://t.co/vvPTjH8C
http://twitter.com/lesleymcmahon/status/171182655143026688 Lesley Brennan

"You've never had it so good" has never been so wrong: @CarlRaincoat on Stewart Lansley's The Cost of Inequality: http://t.co/UAth6Iie
http://twitter.com/britishroses1/status/171182675338600448 BevR

"You've never had it so good" has never been so wrong: @CarlRaincoat on Stewart Lansley's The Cost of Inequality: http://t.co/UAth6Iie
http://twitter.com/favstar_pop/status/171182680057188352 Favstar Pop

"You've never had it so good" has never been so wrong: @CarlRaincoat on Stewart Lansley's The Cost of Inequality: http://t.co/UAth6Iie
http://twitter.com/ukbesttermpaper/status/171186323057672193 uk.BestTermPaper.com

“You've never had it so good” has never been so wrong: Review of The Cost of … – Left Foot Forward: Left Foot … http://t.co/DGkroNwg
http://twitter.com/shamikdas/status/171197537578008577 Shamik Das

"You've never had it so good" has never been so wrong: @CarlRaincoat on Stewart Lansley's The Cost of Inequality: http://t.co/UAth6Iie
Christoff

Yet again a sound and logical explanation of why we have arrived at the present iniquitous society and one that is not sustainable into the future.

However, having read many articles over the past eighteen months I am still at a loss as to why no one is having the guts to state that what needs to done is to change the current political system for one that will address the inequalities that have been allowed to develop.

The article rightly states that over the past 10 years Labour have been in control and this has happened on their watch. So we can we rely on them to sort it out? I think not. Certainly the Tories are making it a whole let worse.

So if we are to ever try to get flexicurity or a more equitable alternative into the national acceptance someone has to break with the current political malaise and bring about a revolution. ( Perhaps Marx was right after all?)

What we need to do is look at how the principles aims of flexicurity can be translated into an acceptable and demanded system for the vast majority, the 99%, of the population.
http://twitter.com/chaostocosmos/status/171203486145445888 Pamela Heywood

"You've never had it so good" has never been so wrong: Review of The Cost of Inequality http://t.co/SS6d6AAy
http://twitter.com/cameronsfollys/status/171210078681169920 cameronsfollys

["I've" never had it so good..] Review[ing] the cost of INequality [the 'Left Foot Forward' way!] http://t.co/tm8wMqaZ http://t.co/70dwxHFs
http://twitter.com/katieuevans/status/171210675618721792 Katie Evans

RT@leftfootfwd: @CarlRaincoat on Stewart Lansley's The Cost of Inequality: http://t.co/MRBKAyOz sounds like this is worth a read.
http://twitter.com/embotx/status/171214225442750466 Emma Lucy Aston

"You've never had it so good" has never been so wrong: @CarlRaincoat on Stewart Lansley's The Cost of Inequality: http://t.co/UAth6Iie
http://twitter.com/creativecrip/status/171216628237860864 TheCreativeCrip

"You've never had it so good" has never been so wrong: Review of The Cost of Inequality http://t.co/SS6d6AAy
http://twitter.com/inequalitiesblg/status/171243424027131904 Inequalities Blog

"You've never had it so good" has never been so wrong: @CarlRaincoat on Stewart Lansley's The Cost of Inequality: http://t.co/UAth6Iie
Blarg1987

Granted New Labour was part of the problem but so was the previous Conservative administration who laid the foundations on which New Labour built on.

To blame one political party for the cause that several political parties supported is silly, yes New Labour did not stop the greed culture of the city but on the flip side did the current goverment oppose such issues? Did they oppose PFI, did they say during the good times the goverment should be using the money gained to save for a rainy day or was it to propose tax cuts?

No one political party is innocent in all this, as no one political prty between the late 40′s and 70′s is one that helped Britain prosper, their needs to be a complete ideological shift of the political parties and more people NEED to vote only then will real change happen.
http://twitter.com/carlraincoat/status/171346279056678912 raincoat optimism

My review of Stewart Lansley's The Cost of Inequality: http://t.co/AAysej7e
http://twitter.com/houseoftwits/status/171349663700623360 House Of Twits

RT @CarlRaincoat My review of Stewart Lansley's The Cost of Inequality: http://t.co/3V3atS0Y
http://twitter.com/Newsbot9 Newsbot9

Still referring to pensions for anyone but your 1% as a ponzi scheme, Blagger?

Keep reinforcing failure, I’m sure you have plans for leaving the country when you collapse the economy entirely.
http://twitter.com/Newsbot9 Newsbot9

1. Sure, heavily disabled people have been kept alive. So sorry this offends. The number of long-term JSA claims before this recession were low. Keep on trying to pump them up now.

2. Ah yes, dribble-down economics, something which is about as credible as David Ike. They couldn’t save anyway, since they’d have to purchase “services” like healthcare, at massive expense. Moreover, those services have a poverty premium – they cost the poor MORE.

Not to mention the fact that most companies would lower wages to account for the lower taxes, because “we’re all in this together”.

3. Except they’d have had to have paid for healthcare and other “services”, meaning they’d not been able, at current US healthcare rates, to have a pension at all. Which is of course your aim.

Keep on trying to reinforce failure and hurt everyone outside the 1%.
http://twitter.com/shirleykvchan/status/171465096332193792 Shirley KV Chan

#capitalism #StewartLansley RT You've never had it so has never been so wrong: Review of #TheCostofInequality http://t.co/4LduomCt
Anonymous

OH I agree. Condems have carried on just as the others have left off. However, this is a Labour blog. As such they have to take responsibility for what they did, and what they didn’t do.

Have no doubt, I push the same on Tory and Lib Dem blogs and direct.

Did they say save? Well they did say the spending was bonkers. I didn’t hear them say save, more lower taxes.

Voting won’t make a difference.

1. They don’t do what is in their manifesto
2. They do things they kept secret and hidden from the manifesto.

7,000 bn of debt, and that doesn’t include bailing out the feckless and poor.

So the inevitable will happen. Newsbot won’t get his gold plated pension, as will all civil servants. [Notice that MPs have a fully funded scheme. When a black hole appeared there, they voted themselves a big top up]. Other ‘fully funded’ government schemes still have the black hole.

State pensions will become means tested, and eroded by inflation. ie. Fix the level, let inflation rip.

Welfare levels will be cut even more. When people who have saved get hit above, to offset their anger at being conned, the welfare cap will be cut. You need to be factoring caps of 11-12k a year. Min wage post tax.

It is inevitable because the numbers don’t add up.

However, Labour doesn’t do numbers. They won’t admit that civil service pensions are a debt. They will bang on about PFI, because those same civil servants and politicians were incompetent and signed off on deals that were rip offs.
Anonymous

Do I have plans?

No doubt your claim is that if you don’t like it f off.

If you don’t like the current cuts, why don’t you f-off to a more favourable country.

Try North Korea. I hear that its a socialist nirvana.
Anonymous

More than that. Heavily disabled people deserve more than being kept alive. However, there aren’t 2.5 million heavily disabled people.

Dribble down economics doesn’t work. Redistribution doesn’t work. The only thing that works is hard work and saving.

In terms of health care. The best solution is the Swiss one. It costs around the same as the UK, just put the details into any one of the quote systems for insurance. http://www.swica.ch/ for a starter. No discrimination against the poor, none against the chronically ill.

Since you’re employed by the state you’re one of the 1%. That’s the problem. Your pensions come to more than the government’s borrowing. It comes to over 50% of the debt for the state pension. That makes you a real fat cat.
http://twitter.com/britishroses1/status/171521953881010176 BevR

RT @leftfootfwd: "You've never had it so good" has never been so wrong: Review of The Cost of Inequality http://t.co/FpIncpxw
Blarg1987

I think PFI was an ideological argument rather then one that actually saved money, but they sued the excuse of money saving to justify it as withall outsourcing programmes it has cost more overall then kept it as it was or manage it better internally.

Voting does help make changes, as if a political party has an idea that is popular the opposition when in power will do something simular, such as with banking reform and the bonus cultire, granted the current Goverment are trying to sweep it under the carpet but as long as the opposition kep going on about it as well as the media, right up to the next election there will be changes, small I accept but changes none the less, this type of mercenary politics is what the electorate should take advantage off.
http://twitter.com/oranjd/status/171672856416104448 James Doran

My review of Stewart Lansley's The Cost of Inequality: http://t.co/AAysej7e
http://twitter.com/Newsbot9 Newsbot9

And of course you’re moving to somalia soon.

It’s quite likely I will “f-off” soon. The destination would be Germany. I don’t want to leave, but the Government you love so much has deliberately devastated the high-tech, creative industry in which I work.

Keep cheering the destruction of this country you crave so much.
http://twitter.com/Newsbot9 Newsbot9

Right, so basically the poor who can’t save get shafted in your model. That’s what doing any analysis whatsoever on America shows.

The Swiss system? Considerably more bureaucratic than the NHS, even, with a morass of regulations and price controls. And it requires co-payments, hurting the poor. It bears an overwhelming resemblance to the energy market in this country, actually.

And I am NOT employed by the state. You’re making up random madlibs again.
http://twitter.com/Newsbot9 Newsbot9

As usual, you’re completely unable to tell between “left” and the centralist Labour party. Why should I bother differentiating between you and the BNP, again?

And of course, ensuring that the people you drive out of jobs and the disabled and poor are alive is SO tragic. Get slaughtering, crazy person.

It’s “inevitable” there are mass deaths in your world, got it. KILL MURDER BEAT. The inevitable response of the right to any problem whatsoever.
Anonymous

PFI is just fraud in my opinion. All designed to hide the extent of government debt off the books, and we are paying well over the odds as a result.

Voting makes no difference because you are confusing voting for the next thief in Parliament with voting for an issue.

As for rewards for failure, look at politicians. They increase the debt by how much? Have they suffered a cut in pay? That is the real reward for failure.

1. If you let the banks go bust, then there is no reward for failure. You’ve lost your job. Bailing them out rewarded them.

If I ask you for a million and you give it to me, who is the idiot? Me for asking or you for giving it away?

We have no choice, we aren’t allow a decision.
Anonymous

Enjoy. Frankfurt is a bit boring. Munich likewise. I would head for Berlin.

Are you going to take your taxes and wealth with you, or are you going to leave them here to be taxed?
Anonymous

You could of course try Belgium. That didn’t have a government for quite some time. Didn’t notice many Belgium war lords!

Germany will do you good. Living abroad does lots of people a lot of good. Opens your eyes up to different ways of doing things.

Even learning German I found an interesting intellectual problem. Lots of things in English made sense, and a language with case and gender makes other languages (particularly those with a proto indo european origin) easier to understand.
http://twitter.com/politicsuk1/status/171712456777924608 PoliticsUK

Left Foot Forward – "You've never had it so good" has never been so wrong: Review of The Cost of Inequality

Do… http://t.co/pmMT89mJ
http://twitter.com/christinasosseh/status/171714615212900352 christina sosseh

Left Foot Forward – "You've never had it so good" has never been so wrong: Review of The Cost of Inequality

Do… http://t.co/pmMT89mJ
http://twitter.com/oilywaters/status/171869597685911552 H. O.

RT @leftfootfwd: "You've never had it so good" has never been so wrong: Review of The Cost of Inequality http://t.co/ghs2uxT2
http://twitter.com/shazrahman30/status/171972544755281920 Shajidur Rahman

http://t.co/ej7CwV6R Why Stewart Lansley's the cost of inequality is relevant to us
http://twitter.com/carlraincoat/status/172816288039702528 raincoat optimism

Before '86 merchant banks paid bonuses of 3-4%. '97 city bonus pool hit £1bn. Decade later, £9bn. It's all here http://t.co/oyeODG5I #bbcqt
http://twitter.com/zephleppard/status/172817023846461441 James Leppard

Before '86 merchant banks paid bonuses of 3-4%. '97 city bonus pool hit £1bn. Decade later, £9bn. It's all here http://t.co/oyeODG5I #bbcqt
http://www.leftfootforward.org/2012/02/the-next-credit-crisis-will-hit-consumers-not-banks/ The next credit crisis will hit consumers, not banks | Left Foot Forward

[...] I reviewed Stewart Lansley’s new book The Cost of [...]
http://www.leftfootforward.org/2012/02/is-the-government-finally-getting-it-on-industrial-policy/ Is the government finally ‘getting it’ on industrial policy? | Left Foot Forward

[...] also: • “You’ve never had it so good” has never been so wrong: Review of The Cost of Inequality – Carl Packman, February 19th [...]