The new Tory party: desert for everybody

It’s taken me a few days to get around to it, but here’s my take on David Cameron’s equality speech (The Big Society: Hugo Young Lecture, 10 Nov 2009).

Cameron name checks Wilkinson and Pickett and says that they “have shown that among the richest countries, it’s the more unequal ones that do worse according to almost every quality of life indicator”.

He then sets himself this rhetorical objective: how can you square an admission that less equal societies do worse than more equal societies with a long-standing Tory view on personal wealth: that is, the wealth of an individual is a reflection of the choices they have made. Since choice is good, material gains that aren’t explicitly judged unlawful must also be good. Here is an example of this kind of thinking in a 1977 speech by Margaret Thatcher:

The economic success of the Western world is a product of its moral philosophy and practice. The economic results are better because the moral philosophy is superior. … Choice is the essence of ethics: if there were no choice, there would be no ethics, no good, no evil; good and evil have meaning only insofar as man is free to choose.

And of course this view was taken up almost wholesale by New Labour, so it’s a view that still has currency in a very large part of Britain’s polity. The problem for advocates of choice simpliciter is that choice is compatible with inequality. And it’s hard to be an advocate of inequality: at least, it’s hard to do it in a way that’s going to make you popular. Cameron’s way out suggests sleight of hand: he switches from talking about inequality measured across the whole of society to talking about inequality between those in the middle and the least well off:

We all know, in our hearts, that as long as there is deep poverty living systematically side by side with great riches, we all remain the poorer for it. That doesn’t mean we should be fixated only on a mechanistic objective like reducing the Gini co-efficient, the traditional financial measure of inequality or on closing the gap between the top and the bottom. Instead, we should focus on the causes of poverty as well as the symptoms because that is the best way to reduce it in the long term. And we should focus on closing the gap between the bottom and the middle, not because that is the easy thing to do, but because focusing on those who do not have the chance of a good life is the most important thing to do.

And if our attention can be shifted towards the category of the least well off and away from the category of the wealthy, then perhaps we might just stop worrying about the wealthy. If this is Cameron’s purpose, he’s only following in the footsteps of New Labour’s Peter Mandelson, the man who told us he was ‘intensely relaxed’ about personal wealth.

But let’s say we take Cameron seriously: let’s say we agree that alleviating extreme poverty is the goal that matters and restrict our political aim to that. How can we reach that goal while (implicitly) either maintaining taxes at current levels or even reducing them? After all, in the same speech, Cameron tells us the increase in government spending since 1997 can’t be sustained. More than that, he argues: ‘large government’ has come to cause inequality:

But, quite apart from the fact that it turns out much of this has been paid for on account, creating debts that will have to be paid back by future generations; a more complete assessment of the evidence shows something different – that as the state continued to expand under Labour, our society became more, not less unfair.

Cameron’s answer, it seems, is to reduce state spending and curtail the role of government and instead go work on the way people think: children should get “better education” and adults should get better attitudes: “responsible behaviour” should be incentivised. Now this may make you think of New Labour, but forget them: to my mind, at least, the stall Cameron is setting out looks as ugly as anything yet brought forth by American conservatives. This is workfare advocacy. And the failure of this approach, of course, is just what people like Wilkinson and Pickett have been working hard to demonstrate.

But even if your stall is unattractive, you can set it out in an honest way. You might simply say: we believe that benefit claimants should do more to justify our support. Cameron goes beyond this. For one, his suggestion that the increase in state spending since 1997 (when New Labour took office) has caused inequality is really reaching. A history of UK wealth distribution shows that most of the post-war rise in inequality took place from the late 1970s to the early 1990s: all Tory years. This is well known. Even worse, Cameron conflates ‘size of government’ with ‘amount of state spending’. These are clearly not the same thing: you can have a small government that spends a lot, or you can have millions of bureaucrats who are needlessly penny-pinching. The complaint that many have made about New Labour is that they have promoted the second. It’s a reasonable complaint, yet it says nothing about the proper role of government: what its aims should be; what makes it legitimate.

Is there anything more going on in Cameron’s speech? Is there a broader ethical point? Is there anything new? I can’t see it. And an old idea which is not getting any Conservative Party air time, but which needs to, is this: an individual’s lawful choices may have bad consequences for others. If our lives go badly, we might have a share in the blame, but we don’t carry all of the blame. Where lives are blighted, adjudicated redress – where those who adjudicate are under democratic oversight – is justified. Taxes can be fair.

12 thoughts on “The new Tory party: desert for everybody

  1. By way of footnoting my own post, it looks as though Thatcher confuses material value (a term I should probably avoid, but by which I mean something like the sum of available commodities) with ethical value (something which additionally takes social arrangements into account). She says that “the economic results [of the West] are better because the moral philosophy is superior”. This could mean either:

    (1) The economic results of non-communist countries are better (material value), since they are the product of a better ethos (one that emphasises personal choice), or;

    (2) The economic results of non-communist countries are better (ethical value) since they are the product of a better ethos (one that emphasises personal choice).

    I tend to think that Thatcher shouldn’t be taken as saying:

    (3) The ethos of non-communist countries is better since non-communist countries are wealthier;

    as that would fully conflate material and ethical value, and I don’t think that’s Thatcher’s intent. And since (2) implies that the ethos of non-communist countries might remain better even if non-communist countries were poorer, (2) and (3) aren’t compatible, although (1) and (2) might be, as might (1) and (3). So I take her to mean (2), with the unspoken rider that non-communist countries are also – by good fortune – wealthy.

  2. I think they are well on their way to “closing the gap between the bottom and the middle” — but not in a good sense!!

  3. What a great post. It’s certainly remarkable the way the entire discourse of our political masters or would-be masters has reduced to just a few terms, of which ‘choice’ seems to be the market leader. I wonder how the warm ‘communitarian’ stuff about mending broken Britain will fare in the face of the deeply embedded imperative to promote market individualism if they get into power?

  4. Even worse, Cameron conflates ’size of government’ with ‘amount of state spending’.

    A little trick he seems to have picked up from American conservatives. The idea is to keep insisting that “money=size” until the corollary “less taxes=smaller government” becomes conventional wisdom. Then you can claim to be against big government while actually expanding the size and reach of government because, hey, you’ve cut taxes.

  5. Your spam protection is illiterate 2+7 = Nine
    I am irritated that it has deleted the whole of my post as a side-effect

  6. Secondly you ought to check your data before making easily refutable comments. The Inland Revenue under Gordon Brown’s control provided data showing that inequality of wealth had DECLINED under every Prime Minister from Churchill to Thatcher but had vastly increased under New Labour (the share of wealth owned by the bottom 50% had decreased by two-thirds under New Labour). [They have now stopped publishing the data]. Thirdly the FT hs in the past week published data showing that the pay gap between the top and the median has doubled in the last decade.
    One way to alleviate income and wealth differences would be to reduce the effective tax rate on the poor to below that on the rich instead of twice as high. Any couple receiving Child Tax Credit for their younger child while their older is at university have an effective marginal tax rate of 81% compared to the 40% paid by a Rothschild or the Duke of Westminster. Is this right, is this fair, is this good economics? NO
    As to your footnote: Mrs Thatcher thought it right, morally as well as logically, that people should be rewarded for their efforts which is why she claimed that the west’s system was morally superior to “they pretend to pay us and we pretend to work” [source: anonymous samizdat]

  7. you ought to check your data before making easily refutable comments.

    Easily refutable, except it seems that you’re not going to throw us a usable citation or two. I perhaps should have been clearer to distinguish between ‘wealth’ and income’; even so, either way, I think the data supports my argument.

    First, income inequality had its biggest increase in the 1980s, as this document from the National Statistics Office shows.

    Information on wealth inequality is harder to come by, but this publication (from the Government Equalities Office) sets out some data (figure 2.20). I think a reasonable interpretation is that wealth inequality began to rise towards the end of the Thatcher administration and continued under Major into the New Labour years. There’s no data for 2004 onwards here.

    However, the corollary to Cameron’s claim that New Labour’s policies are distinctive in having caused inequality is the claim that wealth inequality only began to rise under New Labour (after all, it’d be very odd to have an effect precede a cause). But the data doesn’t support this.

    I think your marginal tax rate example is cherry picking.

    Finally, with respect to Thatcher, you seem to be shooting for something like my (3) above: the best ethos is the one that makes a nation richest.

  8. I shall now have to re-post again.
    Right let’s do one point at a time
    Firstly, I cannot give an url link to a table that has been removed from the HMRC website. This is a copy

    Marketable wealth (excluding value of dwellings)
    %age of wealth owned by 1976 1986 1996 1999 2000 2001 2002
    Most wealthy 1% 29 25 26 34 33 34 37
    Most wealthy 5% 47 46 49 59 59 58 62
    Most wealthy 10% 57 58 63 72 73 72 74
    Most wealthy 25% 73 75 81 87 89 88 87
    Most wealthy 50% 88 89 94 97 98 98 98
    Least wealthy 50% 12 11 6 3 2 2 2

    HM Revenue and Customs

    You might like to read Chris Giles’ article in today’s FT – no url for print version but if you don’t want to spend £2 you can read it in a public library. If you subscribe to you can find it but FT is fussy about copyright.
    He says pay inequality has risen under New Labour, citing bankers but failing to mention MPs and senior civil servants.

  9. Secondly, you reference a table from ONS. If you read the PDF document supplied therewith you will discover that while lower incomes were obtained by a reliable survey higher ones were taken from HMRC data on taxable incomes. “Excellent! you may cry” No, it invalidates the analysis. When Geoffrey Howe reduced higher rate tax from 98% to 60% tax receipts from higher rate taxpayers actually rose. Labour wants us to believe that their income rose 60% overnight – to which the only reasonable answer id “pull the other ones, it’s got bells on”. Taxable income rose because most of the tax-avoidance schemes and the conversion of highly-taxed income into less highly-taxed capital gains became less attractive and unemployment among taxation advisers soared [I cannot remember anyone expressing sympathy].
    The sharp reported increase in income at the top end in 1977-82 almost certainly includes *some* real increase but the large majority is due to choosing to pay tax instead of paying tax advisers. This took a couple of years to work through because some existing schemes involved a commitment for a year or more.

  10. Harriet Harman’s document looks at weekly wages without differing between those working ten hours during term-time as dinner ladies, those working twenty hours every week, civil servants working 35 hours 48 weeks a year less bank holidays and self-employed working sixty hours fifty weeks including bank holidays.
    I did look at it when it came out but got very very irritated: it is a piece of propaganda with some doubtful – and some patently incorrect – numbers attached where they appear to support her argument.
    The ONS published a “Wealth and Assets” survey late last year. There are some blatant distortions which ONS point out in the text where government departments had ordered them to omit the homeless, those in army barracks, student halls of residence or jail and they have excluded the value of private businesses. At least one of the tables clearly does not add up but after I had ‘phoned EIGHT times and no-one except the switchboard operator had either picked up the ‘phone or returned my call I gave up. However it is still a better guide than the “Equality Report” as you can work out an approximation to some of the answers if you have a fortnight to spare

  11. “However, the corollary to Cameron’s claim that New Labour’s policies are distinctive in having caused inequality is the claim that wealth inequality only began to rise under New Labour (after all, it’d be very odd to have an effect precede a cause). But the data doesn’t support this.”

    That is a complete Non sequitur. You might as well say eating junk food cannot be blamed for making me fat because I was already a couple of kilograms overweight before I started eating junk food.

    The share of national wealth owned by the bottom half of the population has fallen by more than two-thirds under New Labour. [It fell by two-thirds in the first six years and has roughly halved again].
    This is not just them getting a smaller share of growth – under New Labour the poor have actually got poorer.

    You comment that it is difficult to get data on wealth – it is a very big coincidence that HMRC stopped publishing data and then withdrew data previously published after I made a fuss about the poor getting poorer while the rich got richer

  12. “I think your marginal tax rate example is cherry picking.”
    I do NOT. If I was cherry picking I could have chosen the areas where people are worse off getting a job, where the extra few pounds from working a few more hours costs them ten times as much in lost benefits (free prescriptions and spectacles). Anyone on tax credits has a marginal tax rate of 71%, the millions with a kid at university have an effective tax rate of 81%. Meanwhile bankers are threatening to leave the country if they have to pay 51%

    “Finally, with respect to Thatcher, you seem to be shooting for something like my (3) above: the best ethos is the one that makes a nation richest.”
    Her comment about that was that the Good Samaritan could not have helped the traveller and paid the innkeeper if he had no money no oil and no wine. Being rich is not an end in itself.

    The ethos of the west was better because we didn’t have secret police, gulags, famines as a consequence of political doctrine, persecution of anyone who voiced disagreement with the government, etc. Yes that did have gradually increasing impacts on relative wealth, so the moral philosophy is a cause.
    Most people would argue that the freedom of choice is a major reason for the superior economic performance of the west as different people would try different ideas and the most successful one would get widely adopted.

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