British inequality is a lot less than as measured
Polly Toynbee lets us in on one of those little secrets about Britian. Not that Polly notices, for of course she doesn’t:
Far from its streets being paved with gold, the capital has the highest poverty rate in England. Its higher pay doesn’t compensate for astronomical housing costs, says the Resolution Foundation, making average Londoners considerably worse off than the average elsewhere. Private renters spend about 40% of their income on housing, against a national average of 36%. In 2025, London house prices were 10.6 times average earnings: in the north-east they were five times. On average, Londoners have the longest commutes.
The only form of inequality that could possibly be worth a darn is inequality of consumption. A large part of Britain’s recorded inequality is regional in nature. We measure by incomes, and we measure nationally. So, those in the North on a specific income are measured as being at this point in the distribution, someone in London on the same as being in that same place. But by consumption - clearly, as Polly says - they are not, not at all. London wages are higher, yes, but by that national measure of income this just contributes to greater inequality rather than what it is actually doing, reducing consumption inequality.
As so often one of our problems is that we’re measuring the thing of interest very badly indeed.
There’s also that little point that we’re taxing those London incomes more. For they are higher in those nominal terms, even if lower in real. Doesn’t seem fair somehow. Paying more tax on a lower real income does seem unfair.
We also thought this was fun, very Polly:
Ah, golf courses! There are 94 around London: the 43 that are publicly owned would provide enough homes for 300,000 people. The rest could be compulsorily purchased: only golfers would regard them as anything but environmental blights.
As Polly cannot think of why anyone would enjoy playing golf therefore there is no use for golf courses. Could just be that Mr. Toynbee has been playing away - golf, obviously - a little too much recently of course.
The thing is we’ve a method of working this out. Markets and prices. It is indeed true that more of Surrey is under golf courses rather than housing. It could well be that this isn’t the optimal distribution of resources. Therefore allow owners of golf courses to sell them to people to build houses upon. At whatever the market price is. We will then gain the optimal distribution of that land. Because that’s what happens in markets, as Ronald Coase pointed out. This works better than a newspaper columnist deciding what should be done with economic resources. We know, we know, difficult to believe that last but we assure you it is true.
Tim Worstall