What causes inequality?
| Author | Davies, Aled |
Review of Stewart Lansley, The Richer, The Poorer: How Britain enriched the few and failed the poor: A 200-year history, Policy Press/Bristol University Press 2021
In the United Kingdom at the start of the twentieth century, 95 per cent of total personal wealth was held by the richest 10 per cent, and 70 per cent was held by the top 1 per cent. Over the following decades, this top share was significantly eroded: by 1990 the richest 10 per cent held just over half of all personal wealth. These top shares have since increased, but not to the level seen in 1900. Today the top 1 per cent holds roughly one-fifth of total personal wealth (which is the lowest share for any G7 country). However, the bottom 50 per cent of households still holds less than 5 per cent of total wealth. At the start of the 1920s, just over one third of pre-tax national income was earned by the top 10 per cent of earners. During the Second World War, and in the decades after, income inequality was reduced, but since the 1970s the gains made have been reversed. By the mid-1970s the top 10 per cent share had steadily fallen to one-quarter of national income; today, the top decile share has returned to the level prevailing at the end of the First World War. (1) This pattern of post-war incomes compression, followed by a relapse, has been the experience of most rich nations in the twentieth century. Today, however, the United Kingdom has one of the most unequal distributions of posttax incomes of the G7 countries. (2) The rise in income inequality in the final quarter of the twentieth century was matched by significantly increased levels of relative poverty, as the proportion of the population who were unable to keep pace with rising average incomes increased significantly during the 1980s. Today one-fifth of the UK population is in poverty, with an income (after housing costs) of below 60 per cent of the median income. (3)
The difficult task of measuring incomes, wealth and rates of poverty over time has been achieved most notably by empirical economists such Anthony Atkinson and Thomas Piketty. In The Richer, The Poorer, Stewart Lansley provides a concise historical account of how these changing patterns of poverty and inequality have intersected with politics and policy-making in Britain since the nineteenth century. He offers a clear account of how successive governments have viewed the question of income and wealth distribution. The narrative that emerges is one in which...
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