How inequality has soared in the US

The top 1 per cent now take home 23.5 per cent of all income.

If you want to get some idea of why the 99 per cent movement has attracted so much support in the US, just take a look at this graph. Over the last thirty years, the share of income taken by the top 1 per cent of Americans has risen from 10 per cent to 23.5 per cent. Even more remarkably, the share taken by the top 0.1 per cent (the top 14,988 US families, making at least $11.5m in 2007) has risen from 1 per cent to 6 per cent. Income inequality in the US is now at its highest level since 1928 (see this excellent Berkeley report for more data), when the top 1 per cent took home 23.9 per cent.

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As you'll notice, from the 1950s onwards, income distribution in the US remained broadly stable until the Thatcher-Reagan revolution. The neoliberal policies pursued by the Reagan administration - tax cuts for the wealthy (the top rate of tax was reduced from 50 per cent to 28 per cent), deregulation and privatisation, led to a dramatic rise in inequality.

Consequently, it's no surprise that even in the US, where the Tea Party has tilted the political spectrum rightwards, the majority of citizens support the aims of the 99 per cent movement. A recent Time/Abt SRBI poll found that 54 per cent had a "very favourable" (25 per cent) or "somewhat favourable" (29 per cent) view of the movement.

It was Alan Greenspan, a disciple of free-market guru Ayn Rand, who remarked in 2005: "This is not the type of thing which a democratic society - a capitalist democratic society - can really accept without addressing." Obama now has a huge political opportunity to win support for a renewed drive against inequality. He was memorably attacked during the 2008 presidential election for wanting to "spread the wealth" but the polls suggest that's exactly what the voters want him to do.

As for the UK, we're not doing much better. The richest 10 per cent now receives 31 per cent of national income and owns almost half of the country's personal assets, while the poorest 10 per cent takes home just 1 per cent of the total income. The coalition's decision to rely on spending cuts (which hit the poorest hardest), rather than tax rises, to reduce the deficit will inevitably widen the gap. Conservatives may criticise the Occupy London movement but they cannot deny that it reflects a grim empirical reality.

George Eaton is political editor of the New Statesman.

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Theresa May’s Brexit speech is Angela Merkel’s victory – here’s why

The Germans coined the word “merkeln to describe their Chancellor’s approach to negotiations. 

It is a measure of Britain’s weak position that Theresa May accepts Angela Merkel’s ultimatum even before the Brexit negotiations have formally started

The British Prime Minister blinked first when she presented her plan for Brexit Tuesday morning. After months of repeating the tautological mantra that “Brexit means Brexit”, she finally specified her position when she essentially proposed that Britain should leave the internal market for goods, services and people, which had been so championed by Margaret Thatcher in the 1980s. 

By accepting that the “UK will be outside” and that there can be “no half-way house”, Theresa May has essentially caved in before the negotiations have begun.

At her meeting with May in July last year, the German Chancellor stated her ultimatum that there could be no “Rosinenpickerei” – the German equivalent of cherry picking. Merkel stated that Britain was not free to choose. That is still her position.

Back then, May was still battling for access to the internal market. It is a measure of how much her position has weakened that the Prime Minister has been forced to accept that Britain will have to leave the single market.

For those who have followed Merkel in her eleven years as German Kanzlerin there is sense of déjà vu about all this.  In negotiations over the Greek debt in 2011 and in 2015, as well as in her negotiations with German banks, in the wake of the global clash in 2008, Merkel played a waiting game; she let others reveal their hands first. The Germans even coined the word "merkeln", to describe the Chancellor’s favoured approach to negotiations.

Unlike other politicians, Frau Merkel is known for her careful analysis, behind-the-scene diplomacy and her determination to pursue German interests. All these are evident in the Brexit negotiations even before they have started.

Much has been made of US President-Elect Donald Trump’s offer to do a trade deal with Britain “very quickly” (as well as bad-mouthing Merkel). In the greater scheme of things, such a deal – should it come – will amount to very little. The UK’s exports to the EU were valued at £223.3bn in 2015 – roughly five times as much as our exports to the United States. 

But more importantly, Britain’s main export is services. It constitutes 79 per cent of the economy, according to the Office of National Statistics. Without access to the single market for services, and without free movement of skilled workers, the financial sector will have a strong incentive to move to the European mainland.

This is Germany’s gain. There is a general consensus that many banks are ready to move if Britain quits the single market, and Frankfurt is an obvious destination.

In an election year, this is welcome news for Merkel. That the British Prime Minister voluntarily gives up the access to the internal market is a boon for the German Chancellor and solves several of her problems. 

May’s acceptance that Britain will not be in the single market shows that no country is able to secure a better deal outside the EU. This will deter other countries from following the UK’s example. 

Moreover, securing a deal that will make Frankfurt the financial centre in Europe will give Merkel a political boost, and will take focus away from other issues such as immigration.

Despite the rise of the far-right Alternative für Deutschland party, the largely proportional electoral system in Germany will all but guarantee that the current coalition government continues after the elections to the Bundestag in September.

Before the referendum in June last year, Brexiteers published a poster with the mildly xenophobic message "Halt ze German advance". By essentially caving in to Merkel’s demands before these have been expressly stated, Mrs May will strengthen Germany at Britain’s expense. 

Perhaps, the German word schadenfreude comes to mind?

Matthew Qvortrup is author of the book Angela Merkel: Europe’s Most Influential Leader published by Duckworth, and professor of applied political science at Coventry University.