As we know there's much a' whinin' an' a' wailin' going on about the inequality extant today. After all, now that we've beaten absolute poverty in the rich would countries they the left must find something to occupy their energies, right, something to complain about?
It's just that some of the things they do say aren't in fact entirely true. As in, you know, factually not so?
Take this for example:Despite the perception that wealth inequality has been rising for decades, the research found that the inequality of net financial and property wealth fell steadily between 1995 and 2005, with the Gini coefficient falling from 0.71 to 0.64.
The shift in property ownership further towards the richest has contributed to the widening of wealth inequality. Including private pensions, the Gini coefficient rose from 0.67 to 0.69 from 2006-08 to 2012-14.
Total wealth across Britain, which includes private pensions, property, financial and physical wealth, rose in the wake of the financial crisis from £9.9tn in 2006-08 to £11.1tn in 2012-14. This has been fuelled by rising pension wealth.
That's all entirely true. Inequality of wealth feel modestly, it's risen modestly recently and pensions are a large part of the story. And given that it's pensions it's not all that much of a worry either. Because lifetime effects are going to account for much to most of that inequality. 20 year olds don't have pension entitlements, 65 year olds mostly do. Pension wealth is therefore always, but always, going to be unequally distributed just because that's the nature of the beast.
But this next is untrue:
Private pensions account for 40% of the wealth total – the largest share at £4.5tn. The report forms part of the Resolution Foundation’s intergenerational commission. Conor D’Arcy, policy analyst at the foundation, said: “The accumulation of wealth over the course of our lives is arguably the most important driver of lifetime living standards, and yet it has been largely ignored in the public debate. Given the hugely unequal distribution of wealth across Britain, it’s time we looked into how the nation’s wealth is divided up and what the consequences are for those who never build up assets of any significance.
The reasons this is untrue are twofold. Firstly, we don't count unfunded (ie, most of them) government or civil service pensions as wealth. No, agreed, it's arbitrary to the point of lunacy that we don't. A public sector teacher getting a £30,000 a year pension is defined as having no pensions wealth, while a private sector teacher getting a £30,000 a year pension from a funded plan is defined as having pension wealth. And given that the pensions are the inequality causing bit it would be a good idea to get that little confusion sorted out, wouldn't it?
The second reason is rather larger though. The basic estimations of wealth here are entirely rubbish. Because they exclude the one great source of wealth and insurance for all of us, the welfare state. When we measure income inequality we do it after the effects of tax and benefits, obviously we do. When we measure wealth we're doing it before their influence. Meaning that our estimations have absolutely nothing to do with reality.
Which leads to the point we would make to the Resolution Foundation and others. Once you all start measuring wealth correctly then perhaps we'll have a discussion about its distribution.