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Leader: Inherited inequality in the age of meritocracy

Thomas Piketty’s book Capital in the 21st Century has had a rapturous reception. 

Not since John Rawls’s A Theory of Justice in 1971 has a work of political theory been as rapturously received on the left as Thomas Piketty’s Capital in the 21st Century. The book having reached the summit of the Amazon sales chart in the United States, its 43-year-old French author, who visited London last week and whom the New Statesman was the first British publication to profile, has become that rarest of things: a celebrity economist.

In this supposedly superficial and anti-intellectual age, his 690-page treatise on inequality, rich in empirical research, has resonated because it speaks to one of the central anxieties of our time: that society is becoming ever more fragmented as the very rich pull away from the rest. As Mr Piketty elegantly demonstrates, as long as the rate of return on what he calls capital continues to exceed the growth rate of the economy (as it has done since the 1970s), inequality will widen to levels unknown since the Victorian era.

It is the United Kingdom that best embodies the troubled future he sketches out: “a society even more inegalitarian than that of the 19th century, because it will combine the arbitrariness of inherited inequalities with a meritocratic discourse that makes the ‘losers’ responsible for their situation”. Britain is the land of the baronet and the banker, the landed aristocrat and the asset-stripper. It combines the worst of capitalism with the worst of feudalism. The result is a society in which both income and wealth are grossly mal­distributed, innovation is stifled and equality of opportunity remains a myth.

To date, Mr Piketty’s critics on the British right have chided him for his focus on inequality, contending that an alternative metric, such as GDP, is a better measure of a country’s long-term success. Yet, as meticulously charted in 2009 by Richard Wilkinson and Kate Pickett in their book The Spirit Level, after a certain point of development, how well a society performs is dependent not on how wealthy it is but on how equal it is. More egalitarian countries, such as the Nordic states and Japan, enjoy higher levels of social mobility, trust and educational performance and lower levels of crime, obesity and mental illness than their divided counterparts, notably the US and the UK. Mr Piketty, who, despite his book’s allusion to Marx, is a mainstream social democrat, not a revolutionary socialist, concedes that some degree of inequality is necessary to stimulate enterprise. But the US and the UK long ago exceeded this point.

If we accept the premise that inequality is a social ill, the question becomes how to reduce it to the benefit of all. After the Scandinavian countries, Britain has one of the most redistributive tax and benefit systems in the world. National Insurance, VAT, income tax – the government already takes a lot of our money. Yet so great is the initial gap between rich and poor that the divide persists.

The solution is twofold. First, policymakers should look to embrace what the Yale political scientist Jacob Hacker calls “predistribution”: seeking to stop inequality before it starts. By pledging to spread the use of the living wage, raise educational standards, build more affordable homes, improve lending to small and medium-sized businesses and expand free childcare, Ed Miliband is trying to develop a programme to do so.

Second, the next government should be bold and secure a more resilient tax base. It should seek to bring the super-rich into taxation. One way to do this is to tax so-called unearned income and inherited wealth, most obviously land and property (and other static assets), which in Britain is even more unequally distributed than income. Wealth taxes are progressive and hard to avoid in an age when capital is so mobile; they benefit the economy by shifting investment away from housing and into more productive industries.

Rather than a society in which birth determines destiny – or “parentage dictates progress”, as the Education Secretary, Michael Gove, puts it – our politicians should seek to build one in which reward is once again linked to contribution.

This article first appeared in the 08 May 2014 issue of the New Statesman, India's worst nightmare?

Nicola Sturgeon. Photo: Getty
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For the first time in decades, there is genuine dissent in Scottish Nationalist ranks

The First Minister is facing pressure to talk less about independence - and bring on new talent in her party.

She so recently seemed all-powerful, licensed to reign for as long as she chose, with the authority to pursue the return of our national sovereignty. We would then have the ability to strike our own deals on our own terms, a smaller, smarter, leaner nation freed from the stifling constraints of partnership with a much larger neighbour. There was, she repeatedly told us, nothing to be afraid of.

Now, suddenly, she is the victim of her own miscalculation: having misread the public mood, having raced too far ahead of moderate opinion, she finds herself at bay. The voters have delivered a public humiliation, while an opposition party until recently lampooned as unelectable is on the march. There is, suddenly, talk of her departure sooner rather than later.

Yes, this is a tough time to be Nicola Sturgeon…

Let’s not overstate it. The position of Scotland’s First Minister is considerably more secure than that of the UK’s Prime Minister. Theresa May wants out as soon as is feasible; Sturgeon, one suspects, will have to be dragged from Bute House. Sturgeon retains enough respect among the public and support among her colleagues to plough on for now. Nevertheless, things are not what they were before the general election and are unlikely ever to return to that happy state.

It’s all because of Scexit, of course. Sturgeon’s unseemly sprint for the indy finishing line left enough Scottish voters feeling… what? Mistreated, taken for granted, rushed, patronised, bullied… so much so that they effectively used June 8 to deliver a second No vote. With the idea of another referendum hanging around like a bad headache, the electorate decided to stage an intervention. In just two years, Sturgeon lost 40 per cent of her Westminster seats and displaced half a million votes. One could almost argue that, by comparison, Theresa May did relatively well.

For the first time in decades, there is genuine dissent in Nationalist ranks. Tommy Sheppard, a former Labour Party official who is now an influential left-wing SNP MP, published an article immediately after the general election calling on the First Minister to ‘park’ a second referendum until the Brexit negotiations are complete. There are others who believe the party should rediscover its talent for the long game: accept the public mood is unlikely to change much before the 2021 devolved elections, at which point, even if the Nats remain the single largest party, Holyrood might find itself with a unionist majority; concentrate on improving the public services, show what might be done with all the powers of an independent nation, and wait patiently until the numbers change.

There are others – not many, but some – who would go further. They believe that Sturgeon should take responsibility for the election result, and should be looking to hand over to a new generation before 2021. The old guard has had its shot and its time: a party with veterans such as Sturgeon, John Swinney and Mike Russell in the key jobs looks too much like it did 20 years ago. Even the new Westminster leader, Ian Blackford, has been on the scene for donkey’s. There are more who believe that the iron grip the First Minister and her husband, SNP chief executive Peter Murrell, have on the party is unhealthy – that Murrell should carry the can for the loss of 21 MPs, and that he certainly would have done so if he weren’t married to the boss.

The most likely outcome, given what we know about the First Minister’s nature, is that she will choose something like the Sheppard route: talk less about independence for the next 18 months, see what the Brexit deal looks like, keep an eye on the polls and if they seem favourable go for a referendum in autumn 2019. The question is, can a wearied and increasingly cynical public be won round by then? Will people be willing to pile risk upon risk?

As the hot takes about Jeremy Corbyn’s surprise election performance continue to flood in, there has been a lot of attention given to the role played by young Britons. The issues of intergenerational unfairness, prolonged austerity and hard Brexit, coupled with Corbyn’s optimistic campaigning style, saw a sharp rise in turnout among that demographic. Here, Scotland has been ahead of the curve. In the 2014 referendum, the Yes campaign and its can-do spirit of positivity inspired huge enthusiasm among younger Scots. Indeed, only a large and slightly panicked defensive response from over-65s saved the union.

That brush with calamity seems to have been close enough for many people: many of the seats taken from the Nats by the Scottish Tories at the general election were rural, well-to-do and relatively elderly. The modern electorate is a fickle thing, but it remains rational. The Corbynites, amid their plans for total world domination and their ongoing festival of revenge, might bear that in mind.

Chris Deerin is the New Statesman's contributing editor (Scotland). 

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