Lies, damned lies, and electioneering statistics: wealth is just accumulating at the top

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In my last blog, I lamented the rise of questionable facts in the election campaign, as politicians bid for votes. I used the claim that there is a “tide of privatisation in our NHS” as case study. I now examine the claim that “The last four decades have seen wealth accumulate at the top of society while those at the bottom struggle to get by." The rich are getting richer, but so are the poor

The world is getting better. Just look at three of the key UN measures of poverty and living standards.

  • Since 1990 extreme poverty (measured as living on less than $1.25) has more than halved.
  • Since 1990 the proportion of people without drinking water has also more than halved.
  • Since 1990 child mortality (deaths under the age of 5 per 1000 live births) has – you guessed it - more than halved.

For more on our better world, read Matt Ridley’s classic The Rational Optimist.

What about poverty in Britain? It’s getting better too.

Since 1977 disposable income for the poorest fifth of households in Britain has nearly doubled (even after taking account of inflation and changes in household structures). With the recent turnaround in the economy, and greater incentives to work from welfare reform, the employment rate and average income of the bottom fifth should continue to rise.

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Even measures of inequality have been relatively stable since the late 80s.

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Income stats hide services the poor can consume from the state

Income statistics only tell some of the story though. The poor are better off than is initially claimed. Firstly, these income statistics and most others, focus on disposable income. They don’t take into account the wide range of services that the poor consume from the state, free at the point of use.

Income statistics are a static snapshot, they don’t capture generational gains

Secondly, income statistics don’t capture individual progress across generations. The young are poor, indebted and have no assets. The middle aged at the peak of their careers are richer, have paid debts off, own property and have made some savings towards retirement. The young will all one day become old and with time, have opportunities to better their lot.

Income statistics don’t reflect the benefits of innovation

Finally, income and wealth don’t reflect the great technological advances of the last four decades. People in Britain are vastly better off today thanks to innovation, particularly driven by the private sector. The poor consume more services as the costs of the basics has fallen as a proportion of income, and have access to new services altogether.

Take computing, which has gone from a luxury good restricted to the super rich and big companies, to being accessible to all. A gigabyte of data storage cost around £200,000 in 1980. Today I was able to find storage on amazon at just 3 pence per gigabyte - cloud services will even give you a load for free. In 1980 we didn’t have mobile phones, today there are 1.3 per person in the UK and 86% of people use the internet. The pace of technology adoption is speeding up too.

An honest debate would reflect on our success and focus on creating more opportunities