Mervyn King, Governor of the Bank of England, March 2011.
Post Credit-Crisis austerity has been about taking less from the wealthy, and taking more from everyone else. Income tax cuts for the rich; wage freezes, pensions and benefits cuts for the rest.
|Office of National Statistics Living Costs and Food Survey|
Consumption taxes, like VAT, have gone up hitting ordinary Britons harder than the wealthy. Why harder? Because ordinary people spend all they earn to pay their bills, while the rich have surplus income to save. You don't pay consumption tax on what you don't consume. In this post, we reveal data from the Paris School of Economics that show how the 90% had their share of the boom stolen. The same 90% who are now made to endure austerity to pay for the bust.
They reassure us that it is for our sake that energy companies hike prices, for our comfort that pension companies take up to 50% of our savings in fees, and it is to give us free banking that banks charge us extra. Which coincidentally generate the profits to pay the massive bonuses and pay for the elite we should be celebrating. We are told we ordinary Britons would be worse off if these were not so.
But is this actually true? The lie is exposed by comparing how the income shares of the elites in France and in Britain have changed.
France and Britain have in recent history done about the same in terms of GDP (see graph at bottom of this post). Using Purchasing Power Parity (PPP), which shows the actual buying power of their money, in 2011 British GDP per person was US$36,500 while the French was US$35,200 per person. A difference in sterling of £2.50 a day.
Britain and France: two nations, both alike in dignity as well as GDP. But between 1981 and 2006 British elites sucked up income ten times faster than the French elite. And the lower 90% of Britons saw their share drop five times faster than the equivalent group of Frenchman.
- Top 0.1%: in France share increased by 40%; in Britain share increased by 362%
- Top 1% : in France share increased by 18%; in Britain share increased by 222%
- Bottom 90%: in France share dropped by 3%; in Britain share dropped by 16%
No, I don't know why there is a gap in the dataset for the UK between 1986 and 1992
For clarity,the drop in share has resulted in a stagnation of income of the bottom 90%.
So, next time someone tells you that great inequality is good for everyone send them a link to this post.