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Should the amount we receive in benefits depend on how much we've paid in tax? Fine, if you believe the market accurately and efficiently rewards you for your work, rather than your (in)ability to negotiate an increase in your pay. But if the market doesn't, then benefits should also re-distribute wealth to make up for that failure.

The market clearly fails on its own. Don't just think about bankers' bonuses and corporate fat cats. The share of national income being paid to employees (as opposed to going into things like corporate profits) has been dropping since the 1970s. Yet economic growth has remained much the same since then.

What this means is that as the country gets richer, the share paid to ordinary employees has fallen, as can be seen from this data from the Office of National Statistics.

(The ONS defines "Compensation of employees" as wages, salaries and social contributions made by employers).

Yet since 1979 both the richest 1% and 10% have seen their share of national income rise. Despite that, the UK's GDP rose no faster. There was no benefit from "rewarding" the richest.

Data taken from the Paris School of Economics's World Top Incomes Database (Alvaredo, F., Atkinson, A. B., Piketty, T. and Saez, E)
Gross Domestic Product per capita by Purchasing Power Parities (in international dollars, fixed 2005 prices). The inflation and differences in the cost of living between countries has been taken into account. Source organisation: World Bank. Data downloaded from Gapminder

Since the mid-1990s the very richest - the top 1% - have seen their incomes (before taxes and benefits have been taken into account) double, whilst the income of the bottom 90% has remained unchanged. Yes, that all happened under New Labour.

Source organisation: Paris School of Economics http://topincomes.g-mond.parisschoolofeconomics.eu/#Database:

Despite growing inequality in the UK compared to our European rivals, we have not outperformed them. History shows left/right policies grow the economic cake equally. The difference is only in how the cake is divided.

Gross Domestic Product per capita by Purchasing Power Parities (in international dollars, fixed 2005 prices). The inflation and differences in the cost of living between countries has been taken into account. Source organisation: World Bank. Data downloaded from Gapminder


FURTHER READING: History shows left/right policies grow the economic cake equally. The difference is only in how the cake is divided

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