Trickle up: pigs in the pipe
May. 4th, 2007 12:52 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
imomus
Great news! The Sunday Times has published its new Rich List... and wealthy people in Britain have never had it so good!"The combined wealth of the top 1,000 has soared by £59 billion in one year to just under £360 billion," reports an article entitled Wealth Goes Supernova. "This near 20% rise over 2006 is one of the highest annual increases in wealth we have recorded since our first list was published in 1989. The past decade of Labour government under Tony Blair has proved a golden age for the rich, rarely seen in modern British history. When the Blair administration came to power in 1997, the wealth of Britain’s richest 1,000 stood at £98.99 billion. The £261 billion rise in the wealth of today’s top 1,000 represents a 263% jump over the past 10 years."
Whoopee! That's great news for everyone, because wealth trickles down from the richest to the poorest! Wealth spreads around! Or does it?
According to Bryan Caplan, author of "The Myth of the Rational Voter: Why Democracies Choose Bad Policies", the general public in many democracies don't believe that wealth trickles down. And according to him, they're wrong, and need decision-making taken out of their hands; economic decisions should be taken by a specially-appointed panel of economic experts. The electorate, you see, show fundamental ignorance of economics. Speaking on the BBC's Thinking Allowed, Caplan said:"Compared to economists, the general public is much more skeptical about the social benefits of markets. So they tend to think that just because businesses are out for money -- and they are -- that the effects are going to be negative for society. This is not really true. An example I often use is that if you're at a restaurant, would you want your waiter to not be greedy? It's the very fact that he's interested in making some money that allows you to get good service from him."
Yay! Greed is good for all of us! Rational self-interest will create, through markets, the best of all possible worlds!
Not everybody on the programme agreed, though. Paul Whitely explained "the paradox of rationality":
"What is rational for an individual may not be rational collectively, and vice versa. We know that these collective failures of rationality are quite significant. To give you an example, by comment consent the Common Agricultural Policy that Europe runs is a terrible policy. It distorts markets, produces waste, environmental degradation, etc. Naturally enough, if politicians want to get rid of it, farmers oppose this. Farmers are not being irrational opposing it... it's something that brings them benefits."
Ah, there we have it. The rather more tough-minded, less rosy-spectacled approach. Different groups in society have different interests. What's in the interest of one group isn't necessarily in the interest of the others. And that applies particularly when one group is massively more rich or powerful than the others. The property market in Britain "is bleeding millions of Britons dry", says Bricked In, an interesting report in today's Guardian, which says that up to half of first-time buyers have now been priced out of the UK housing market altogether. And again this idea of collective rational interest being the opposite of individual rational interest comes up:
"Equity, and all the consumer buying-power it represents, has helped to keep Gordon Brown's much-vaunted economy ticking over nicely for a decade - but we have acceded too easily in the assertion that what is good for the economy is necessarily good for the bulk of people. Rising prices are turning the trickle-down effect on its head: the richer people at the top get, the more they pay for scarce housing, and the more actively difficult they make it for everyone else."
In The New Statesman Faisal Islam looks at how different generations, as well as different income brackets, have different interests. British baby boomers, he says, have kicked away the ladder for the generation following them -- effectively robbing their own children of the things they had.
"If you are over 50, you will recall a blessed carelessness about money in your twenties and thirties that you probably took for granted at the time. You had free university tuition and, if your parents were sufficiently poor, full university maintenance grants. To that, add free dental care; cheap (relatively) houses with gardens; mutualised building societies; statutory retirement at 65 (probable retirement well before then); and final-salary private pensions."
"Demographics show the root of the problem. On the Office for National Statistics website there is an animation which shows age distribution in Britain. The population pyramids that once showed many young people at the bottom supporting a small number of older people at the top is being flipped on its head."
And there it is again. Trickle up, not trickle down. The young and struggling supporting the old and affluent, when it "should" be the other way around. The poor supporting the rich. Resources going to those who already have them, not those who need them. That gravity-defying inverted pyramid is the shape of our times. There's one consolation: it's completely unsustainable, materially and morally. So it won't be around for long.
Another reason it won't be around for long is that the current situation is a result of what economists call the "pig in the pipe". The pig is baby boomers and the pipe the decades they've been charging through, changing their priorities (and the world's) as they went. "They embraced social liberalism, flower power and a large state when they were teenagers, and low taxes, a smaller state and loadsamoney individualism in their period of high disposable income," says Faisal Islam. Then the pig realised that it, too, was mortal.
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
Momus?
Date: 2007-05-04 11:06 am (UTC)Re: Momus?
Date: 2007-05-04 11:18 am (UTC)(no subject)
Date: 2007-05-04 11:42 am (UTC)(no subject)
Date: 2007-05-04 11:42 am (UTC)Re: Momus?
Date: 2007-05-04 11:44 am (UTC)Where I got off the Boomer bandwagon, attitudinally, anyway, is that exact 80s moment when John Lydon warbled (in the tone of a muezzin call to prayer) "Big business is very wise, I'm crossing over into enterprise".
[Error: unknown template video]
(no subject)
Date: 2007-05-04 11:47 am (UTC)(no subject)
Date: 2007-05-04 11:50 am (UTC)But it means that all the financial gains made by the working class boomers are funding Gen Y, so no one actually ends up any better off.
How are Gen Y going to house their adult kids, put them through Uni/college and subsidise their poorly-paid jobs when they themselves are still paying off student loans, working short-term contracts and have no property equity?
(no subject)
Date: 2007-05-04 11:51 am (UTC)(no subject)
Date: 2007-05-04 12:02 pm (UTC)do the kids leave Britain?
Date: 2007-05-04 12:13 pm (UTC)Now, where did all the kids from 1972 go?
They don't get older at a faster rate than their peers.
They're not dying off that fast, are they?
So how does it work -- do the kids leave Britain?
Respect?
Date: 2007-05-04 01:52 pm (UTC)(no subject)
Date: 2007-05-04 02:25 pm (UTC)(no subject)
Date: 2007-05-04 02:35 pm (UTC)(no subject)
Date: 2007-05-04 03:32 pm (UTC)(no subject)
Date: 2007-05-04 03:36 pm (UTC)Graduating into the 'real world' is akin to being still-born for my generation (on the cusp between gen x and gen y, if we are to use those silly ones). Most of my peers have gone straight from college to several frustrating years of low-wage, low-significance jobs in which financial dependence if virtually unattainable, or, in the case of a few, have had to sacrifice all of their time and passions for jobs that long abolished the 8 hour day in the name of salary and still leave them in a position where they just barely scrape by.
What are most of my friends, ranging from early 20s to early 30s, doing or trying to do now? Go back to school! Accumulate degrees and amass more debt! That seems to be the only viable option for many, myself included, and ultimately I think it may just be a matter of putting off the inevitable. It seems that those my age are left with the choice of either forsaking their passions or forsaking their financial independence and crippling their futures (of course many don't even have that choice). I've gone with the latter, choosing to dedicate myself to the creative world, and honestly, when I look to the future, it scares the hell out of me. Short of some stroke of luck that lands me financial success from my creative outlets (and I'm not even putting a single egg in that basket), I don't see myself ever having the independence or safety of my parents, and they are both self-made, degreeless, and from working class and poor families. Lord knows what it would mean for someone in my position to try to have a family or stable home.
Re: Respect?
Date: 2007-05-04 03:59 pm (UTC)All left movements in the UK still reckon they can turn the clock back to before neoliberalism/Thatcherism, when they should be thinking about how to turn the clock forward *beyond* it. We need to work out why the neoliberal revolution succeeded, not pretend it didn't happen.
Galloway I love - he's always great entertainment. What chutzpah! I salute his...etc
(no subject)
Date: 2007-05-04 04:04 pm (UTC)I wonder if that's part of the problem? All white (for want of a better word) Gen Y-ers I speak to seem to think they're writers, or musicians, or artists, and get treated appallingly by agencies, callcentres and the like. Meanwhile, immigrant kids study maths/computing/medicine and get the few remaining decent jobs. Why is this? Is it something to do with the education system?
excellent
Date: 2007-05-04 04:14 pm (UTC)(no subject)
Date: 2007-05-04 05:53 pm (UTC)This whole attitude is a way of separating everything from where it comes from--- land. The cultures-- arts, music, social systems, etc.-- of the world originally stemmed from their relationship to local flora, fauna, and minerals. Culture and cultivate come from the same "root". Which has to do with revolving, a cycle. So our culture has been cut off from this root, and energies are no longer cyclical. Our culture uses energies only once, amassing them through usury in the hands of a select few, then turns what's left into noxious poisons. We think energy, and therefore our destruction of it, are infinite, but as you've said, we'll soon learn otherwise! Even Monsanto can't get something from nothing, and the only way they do this, now, is through intense use of fossil fuels. So as for what's good for farmers, this system isn't. It robs an ancient art of its dignity and turns all farmers against one another. It also turns our common home, the earth, into nothing more than a one-night-stand waystation. No wonder we all feel so dispossessed.
Incidentally, isn't it thanks to the British landed tradition that in the US we have acres and acres of perfect lawn grass as far as the eyes can see?
(no subject)
Date: 2007-05-04 06:08 pm (UTC)Bad times, financially.
self-made, degreeless, and from working class and poor families
Date: 2007-05-04 07:22 pm (UTC)(no subject)
Date: 2007-05-04 07:28 pm (UTC)I remember 65cents for a gallon of gas and not having enough money to put gas in my car. I remember scraping by and defaulting on my school loans. But good things happened too. I think. The 70's were kind of a blur.
(no subject)
Date: 2007-05-04 07:48 pm (UTC)(no subject)
Date: 2007-05-04 08:16 pm (UTC)(no subject)
Date: 2007-05-04 09:13 pm (UTC)You know man, you're pretty rich by most people's measures
Date: 2007-05-04 09:17 pm (UTC)Be that as it may, when you integrate England's situation forward in time to when Boomers are more retired than they are now, you basically get Japan. Economic stagnation, and exporting of capital to countries with growing populations, like America. Still, the generational hump is world wide, so we have such problems here as well. Countries with worse demographic problems than the UK, like Italy, tend to resemble Japan in their structural difficulties -aka, lots of poor young people with no jobs, and so, no real inclination to make more poor people. So, that's what you can look forward to. Less jobs. More yobs. Without Italy's nice weather.
Re: You know man, you're pretty rich by most people's measures
Date: 2007-05-04 10:01 pm (UTC)The trickle-down theory is a farce, but I'm equally sceptical of egalitarian "share the poverty" schemes, too. It's as ludicrous to me as trying to make sure that every stone on a beach gets equal time in the water. Why get on with life if you know the outcome? Even if it is just, such orderliness is godawful boring, and wouldn't last for very long. People need a bit of chaos in their econo-political models. Our devisings may not be natural phenomena, but we are.
In general, I think the West's ideas on economies and governance have run their course for now; rehashing our past mistakes is a bad idea, be it gilded age laissez-faire capitalism or stifling socialismo. I hope the new economic and political models will come from Asia, especially India. The majority of those populations have always had to think on their feet just to survive, and over time I think they will present ingeniously flexible, energetic, polyglot solutions to economic inequality and poverty (look at micro-loans). Best of all, I'll be willing to bet that, for the most part, their innovations will be foucused on what works best rather than encumberances like ideology. Ultimately we're talking about infrastructure, aren't we? We need more engineers, not idealogues.
(no subject)
Date: 2007-05-04 10:06 pm (UTC)(no subject)
Date: 2007-05-04 10:15 pm (UTC)(no subject)
Date: 2007-05-04 11:24 pm (UTC)Re: You know man, you're pretty rich by most people's measures
Date: 2007-05-04 11:41 pm (UTC)I am, however, time rich (I put a great deal into this blog -- at least three hours on today's entry, for instance). And yes, my education was expensive and extensive (and government-funded at university level), and for that I'm very grateful. It's also a fantastic privilege to be able to travel.
Happiness for me is cycling with my girlfriend to the swimming pool or the children's farm in Gorlitzer Park. If I were really a rich rock star, I could go there in a limo, driven by a chauffeur, talking on the phone to an investment advisor, and accompanied, when I left the car, by two bodyguards. Would that be any nicer?
bacon
Date: 2007-05-05 12:32 am (UTC)That property fetishism you mention almost defines the character of nouveau riche Ireland, there are a risable series of ads for a Dublin development in one of our broadsheets showing coupling couples wolfing pre-conjugal strawberries on a granite work-top (there's nothing like facing the payments on a 300,000 Euro plus mortgage to cause one to get wood). Incredibly people here seem to take it for granted that shackling themselves to a 1,500 Euro per month 35 year mortgage is a form of adult self-assertion, forgetting that some day they will die and may at some point before find time to muse on a youth and middle-age spent working 60+ hours a week for a pile of bricks and mortar - that is if they can momentarily avert from wet-daydreaming over those Rich Listed net worths.
Regards - Thomas S.
(no subject)
Date: 2007-05-05 05:03 am (UTC)Good post, McGazz.
Re: bacon
Date: 2007-05-05 10:34 am (UTC)It's even worse here (west London) - 300,000 euros would buy you a one bedroom apartment. I'd literally be looking at £500,000+ to buy a first 'family house'. My parents own two properties with a combined worth of now more than £2 million ($4 million USD?!), and no they're not rich farnsworths, it's just that their properties have both shot up in value over the past 20 years or so (literally close to 10x).
As all this money is essentially tied up in bricks and mortar, and can't be cashed in until one dies or retirees, essentially all it does is fuck over the first time buyers (*hands up*). So I'll be emigrating then (this year).
things you love
Date: 2007-05-05 03:42 pm (UTC)Say it.
Re: things you love
Date: 2007-05-05 03:44 pm (UTC)So who is trickling onto who?
Date: 2007-05-05 04:20 pm (UTC)Re: You know man, you're pretty rich by most people's measures
Date: 2007-05-08 04:43 am (UTC)That's rather my point. I don't hold it against you: I want to be where you're at, financially and time-wise. I'm just saying, as a genuine member of the lumpenproletariat, when I read some of your leftist political opinions, I can't help notice that an awful lot of my other comparatively wealthy friends say stuff like that, and none of my plebian mates ever say stuff like that. Maybe it is worth considering that poor folks like things like the army because it allows for social mobility, police and private legal ownership of guns because otherwise our neighborhoods would be like Beirut, and dislike things like environmentalism, because it's always applied to Cletus' pick up truck, and never to people flying to Bali to go to a rave, and communism, because working people are the first to get sent to the gulag as soon as we're done building it.
For what it is worth, I really appreciate your blog: I learn stuff here, and get unique insights I don't think anyone else is providing. It is perhaps unpleasant of me to bust your stones about having more money and leisure time than I ever will, but there you have it anyway.
Re: You know man, you're pretty rich by most people's measures
Date: 2007-05-08 08:52 am (UTC)an awful lot of my other comparatively wealthy friends say stuff like that, and none of my plebian mates ever say stuff like that
I think you have to have climbed that materialist hill, and gone over the brow, to become a post-materialist. I notice even the Chinese now reaching that point. Check this article (http://www.latimes.com/news/nationworld/world/la-fg-confucius7may07,0,623550.story?coll=la-headlines-world), about a return to Confucius in China and a search for spiritual meaning beyond mere money-making.
Re: You know man, you're pretty rich by most people's measures
Date: 2007-05-08 05:32 pm (UTC)The political disconnect between leftists and the proletariat is an old one. The only group to ever deal with it successfully was the French communist party, who were, until recently, requiring their members to marry, reproduce and work menial jobs so they would have something in common with the people they were claiming they were liberating. It is worthy of note they became unimportant in French politics at around the time they stopped requiring this.
No surprise the chinese are becoming more like disaffected americans (confucian chicken soup for the soul and all; I bet the richer ones start becoming megachurch christians like the Koreans have), but with a richer cultural substrata. Once it provides a basic living for everyone, rampant consumerism isn't much spiritual meat to live off of. But then, it does have the advantage of providing a basic living for everyone.
Re: You know man, you're pretty rich by most people's measures
Date: 2007-05-08 06:00 pm (UTC)Well, the world is also full of people with credit cards and cars. I have neither. This year I applied for two credit cards and got refused by both banks!
This is going to turn into The Four Yorkshiremen if we're not careful!
Re: You know man, you're pretty rich by most people's measures
Date: 2007-05-09 09:01 pm (UTC)Benjamin writes about spoilt rich nations
Date: 2007-05-11 01:49 am (UTC)