Man, it’s hard just to live. Bank of Ireland Private Banking has just produced its second ‘Wealth of the Nation’ report, which is a strange title because really it’s about the wealth of a tiny fraction of the nation. According to the report – the top 1% holds 20% of all the wealth of the nation. When residential property is excluded, just 1% holds an astonishing 34% of wealth. Leave aside for the moment all those debates over the deciles distribution of disposable income. This is about power – real financial power; and the few people who wield it.
Describing this as the ‘golden age of wealth accumulation’, the Report gives an overview of total household assets.
Nearly 70% of all wealth is made up of residential property, with deposits and pension funds making up the next largest group of assets. Of this total, the top 1% owns 20%; the top 2% owns 30% while the top 5% owns 40% of all wealth.
The Report states the Irish people are the second wealthiest per capita in the world – behind Japan but ahead of the USA, not to mention every other country in the world. That’s one way of looking at it, but not a very in-depth way. Looking at national figures can hide the actual distribution of that wealth among people.
When considering financial wealth excluding residential property, the report provides an even starker perspective on inequality. There is a total of €294 billion in financial wealth. The top 1% is estimated to own 34% of that, or about €100 billion.
Individuals in the top 1% own on average €2.4 million. Everyone else, on average, owns €47,000 – or about 51 times less. It would have been interesting to get the Report’s estimate of how much the top 5% owned. This would have, no doubt, shown that the bottom 95% owned much less than €47,000 each.
It is worth noting that for most people, their main assets are their homes and, secondly, pension savings. Both of these, for most people, are not readily accessible. Though some may use their home to release equity they do so at a price – increased debt. The fact is that most people don’t treat their home as a capital asset but rather as an item of use. As for pensions, this is not normally accessible until retirement. So for the vast majority of people their main assets are not something they can easily cash in on.
What is a realistic response to this gross inequality? We should be wary of ‘soak-the-rich’ rhetoric, for it suggests that all the social demands of the Left can be sustainably paid for by a handful of people without any economic blow-back. However, we can still give these folk a fair ol’ splash.
But a deeper problem remains. Following the dismal general election result the Left is being seduced by a misguided discourse based on a reactive analysis. Namely, that the Left is somehow ‘uncomfortable’ with wealth creation and that it is out of step with the ‘entrepreneurial’ age. In this discourse, ‘egalitarianism’ and ‘super-rich’ and ‘redistribution through the taxation and regulation’ seem as out of place as, well, trade unions.
Maybe there’s something in this. But it’s incumbent upon those who put forward such a thesis to move beyond assertion and provide a hard analysis that can be tested and debated. The fact is the Left can do better than such lazy shorthand (of which, arguments for changing Labour’s name are a prime example).
First, the implications for democracy are profound. Any market analyst will tell you that 40% ownership is in most cases enough to give you controlling interest in a company – especially in companies with wide share dispersal (Ryanair’s attempted buy-out of Aer Lingus was atypical). So if the top 5% own 40% of wealth, they pretty much have controlling interest in Ireland plc.
Second, new studies are beginning to discover that, in economically mature countries, high concentration of wealth is negatively related to economic growth.
Third, it is clear that ‘the new middle class’ or ‘working class households with middle class aspirations’ or just plain ol’ middle class (can’t we please just say ‘the vast majority of people who have a job and whose main source of income derives from that job’) are closer to each other in terms of wealth, and closer to those in the extremely low-income groups, than they ever will be to those few who own controlling interests in the economy.
So here’s a thought. The Left should launch an ‘Are You a Member of the 5:40 Club?’ This campaign could do three things:
- Explain the deep, anti-democratic, anti-growth, anti-social inequality that exists today.
- Put forward ‘splash the controlling interests’ proposals
- Argue that the revenue obtained from this ‘splash-around’ be ring-fenced for investment in indigenous manufacturing and service enterprise – start-ups, expansion and, crucially, development of exports – all under the rubric of real social and democratic partnership.
Each of these elements are worthy of articles in their own right. But generally such a campaign would immediately ground the Left in issues it could eventually own – inequality; a redistributionist programme; and a commitment to real enterprise and partnership development. It’s egalitarian, it’s entrepreneurial and it can speak to the vast majority who work or want to work for a living. And we might find unexpected allies – the Irish Independent ran a front page story that old fashioned lefties could not have written any better, while Marc Coleman taunted the Left for not having a strong inheritance tax programme.
Such a campaign – with leaflets and posters and pickets and news conferences and seminars and heckling in the Dail – would not get the Left much liked among the controlling interests and their allies, but it would certainly help in creating an identifiable and relevant ‘brand-image’. So by way of kick-starting all this – I’ll make a contribution of a couple of hundred campaign badges:
How about: ‘The 5:40 Club? It’s obscene.’