Matt Ridley: “Do people mind more about inequality than poverty?” (So what if somebody else has a yacht?)

In a new article:  “Do people mind more about inequality than poverty?”  Matt Ridley has used public misperceptions of poverty and undoubted reductions in global poverty to obfuscate and trivialise the very real issue of growing inequality within nations.  In the article Ridley totally ignores concerns about the excessive concentration of wealth in an increasingly powerful global elite.

Ridley points out that public perceptions of poverty and inequality are unreliable but this is not earth shattering news – evidence abounds that the “British public is wrong about nearly everything” or “Perceptions are not reality

Evidence does show that there has been a decrease in global poverty and a small decrease in global inequality. These improvements are obviously good news and should indeed be publicised.  We need to ensure that these improvements continue and at a faster rate.  However, small changes to extreme poverty and inequality still leave unacceptable levels of extreme poverty and inequality.  Furthermore, looking at global figures it is easy to hide realities like:

“Almost half of the world’s wealth is now owned by just one percent of the population, and seven out of ten people live in countries where economic inequality has increased in the last 30 years. The World Economic Forum [1] has identified economic inequality as a major risk to human progress, impacting social stability within countries and threatening security on a global scale.

This massive concentration of economic resources in the hands of fewer people presents a real threat to inclusive political and economic systems, and compounds other inequalities – such as those between women and men. Left unchecked, political institutions are undermined and governments overwhelmingly serve the interests of economic elites – to the detriment of ordinary people.” [2]

This, below, is Ridley’s  concluding (penultimate) paragraph  (his final paragraph is bunkum – check it out for your self):

“None of this is meant to imply that people are wrong to resent inequality in income or wealth, or be bothered about the winner-take-all features of executive pay in recent decades. Indeed, my point is rather the reverse: to try to understand why it is that people mind so much today, when in many ways inequality is so much less acute, and absolute poverty so much less prevalent, than it was in, say, 1900 or 1950.  Now that starvation and squalor are mostly avoidable, so what if somebody else has a yacht?”

This is, at best, disingenuous. In the first sentence Ridley says that he doesn’t want to imply that people are wrong to resent inequality and yet in the following sentence he does just that – does he think we are all stupid? The final sentence starts with nonsense and finishes with a straw man.  The issue is not resentment or envy of the successful local entrepreneur who owns a yacht for sailing with friends and family, this is just a Ridley obfuscation. The real issue is the power that a £75 million super yacht’s owner has to influence or control the democratic checks and balances that protect us, however imperfectly, from rule by plutocracy. It is the fact that Global inequality is about power, not just wealth or yachts, that Ridley, no doubt deliberately, manages to brush under the carpet.

 

The graph below shows how the improvement in the global distribution of income is mainly due to rising incomes in the emerging economies like China.  At the same time ordinary people in Europe and the US have seen their incomes stagnate or decrease.   The winners have been those in the emerging economies that have been able and lucky enough to benefit from their country’s growth and a very small global elite. The losers are the very poorest (e.g. in sub-Saharan Africa) and the working / middle  classes of the developed nations.

income growth

 

 

 

 

 

 

 

 

 

 

 

The issue here  is not about talented or hard-working individuals being able to afford to own a yacht. It is about a small elite, less than 1% of the population, who are so excessively wealthy that they can exploit their resulting power to disrupt the normal political, democratic and regulatory processes for their own benefit and to the detriment of ordinary people.  This gross inequality of power is a major risk to human progress, impacting on social stability within countries and threatening security on a global scale.

Coincidentally, Matt Ridley (5th Viscount Ridley), with a family estate of Blagdon Hall, near Cramlington, Northumberland just happens to be a hereditary member of the 1%:
http://www.reasonandreality.org/?p=1468

Source  for graph  – Branko Milanovic: 
http://www.huffingtonpost.com/branko-milanovic/winners-of-globalization-_b_4603454.html

[1]  Global Risks 2014 (World Economic Forum): http://reports.weforum.org/global-risks-2014/executive-summary/

[2]  Working for the Few – Political capture and economic inequality (Oxfam):  http://www.oxfam.org/en/policy/working-for-the-few-economic-inequality

The Rise of Inequality, Branko Milanovic (IMF):  http://www.imf.org/external/pubs/ft/fandd/2011/09/Milanovic.htm

The richest 85 people on the globe – who between them control as much wealth as the poorest half of the global population put together – could squeeze onto a single double-decker: http://www.theguardian.com/business/2014/jan/20/oxfam-85-richest-people-half-of-the-world

Global inequality is about power, not just wealth:  http://newint.org/blog/2014/01/27/inequality-power-wealth-davos/

U.N. sounds alarm on worsening global income disparities (Reuters): http://www.reuters.com/article/2014/01/29/us-global-economy-un-idUSBREA0S1FD20140129

Capitalism vs. Democracy:  http://www.nytimes.com/2014/01/29/opinion/capitalism-vs-democracy.html?smid=tw-share&_r=0

Why Income Inequality Is Here to Stay by Branko Milanovic: http://blogs.hbr.org/2013/01/why-income-inequality-is-here/

Winners of Globalization: The Rich and The Chinese Middle Class. Losers: The American Middle Class, Branko Milanovic:  http://www.huffingtonpost.com/branko-milanovic/winners-of-globalization-_b_4603454.html

“British public wrong about nearly everything” or “Perceptions are not reality”: http://www.reasonandreality.org/?p=2887

Matt Ridley – failed banker and rightwing neolibertarian: http://www.reasonandreality.org/?p=1468

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5 thoughts on “Matt Ridley: “Do people mind more about inequality than poverty?” (So what if somebody else has a yacht?)”

    1. Thanks for leaving a comment Rick.

      I will start my response by noting that this debate is not about wealth or inequality, it is about the level of inequality.

      When inequality becomes extreme, the harmful consequences are there for all to see. I will give just a few examples:

      Ordinary people in London, working hard, in full time jobs, are unable to make ends meet because housing costs are inflated by the super-rich. With no hope of buying a house and unable to afford the rents people are forced to move elsewhere often to somewhere with poorer schools, poorer job opportunities, etc, and away from their friends family and support groups. This also applies to those who were born and grew up in places that happen to be attractive places for those able to afford second, third , fourth holidays homes.

      Your son /daughter is bright and has done well at school but does not stand any chance of getting into their chosen career because it requires at least a year of unpaid internship in London. Those unpaid internships only exit because there are people who are rich enough to subsidise their children not just through 0 -18 but on into adult hood paying for internships and providing the deposit for their first house etc.

      This is not about envy or jealousy it is about natural justice and the potential break down of society.

      I could go, on the list is endless and it is clear that ever increasing inequality is a destructive trend. It is interesting that people are finally becoming aware of this and neo-libertarians seem to be on the back foot after 30 years of dominance

      The irony is that increasing inequality is not even in the interests of the super-rich.

  1. Inequality has always been extreme if you are poor.
    My son studied cinematography and the unions prevented him getting work behind the camera. Who do I blame for that?
    When I lived in Toronto in the late 1970’s my wife and I could not afford a house or an apartment.
    My son and his wife live in Vancouver and cannot afford a house.
    But I think you have to look a little deeper than the rich causing it.
    I can’t afford to give them a down payment, so like my wife and I, they’ll rent until they can save for it.
    Maybe when the housing crash happens in Vancouver, like the one tat’s being feared in London, they might be able to afford one.
    Hope you can take the time to read this link…
    http://reason.com/archives/2014/04/26/living-with-inequality
    For those that have an easy life, I’m happy for them, and it’s what I strive for every day at work.

  2. Oh, go on then, I’ll bite. Take:

    “Ordinary people in London, working hard, in full time jobs, are unable to make ends meet because housing costs are inflated by the super-rich. With no hope of buying a house and unable to afford the rents people are forced to move elsewhere…”

    This isn’t true. There are 8.5 million people living in London. Only a tiny number of them are the super rich. Being very generous to you, that leaves say 8 million people ranging from poor to really rather well off who live in London. And London’s population is not shrinking, as your logic would have us conclude. The super-rich are not, for example, buying up terraces of hundreds of houses containing thousands of people and converting them into mansions for the few; no, they are buying already existing mansions.

    Of course, you haven’t defined “super rich” so I’ve no idea what your threshold is. You talked about wealth; you need ~ $700k to be in the top 1% (http://www.investopedia.com/articles/personal-finance/050615/are-you-top-one-percent-world.asp) so in that way any couple with a house in a decent part of London and a reasonable pension is in the top 1%. This will include a great number of “ordinary people”.

    1. Thanks for the excellent response William and apologies for the delay in approving it. I am rather busy at the moment but will respond asap.

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