Five million dollars in cash. Photo: Joe Raedle/Getty Images
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Leader: The 1 per cent and the masses

The thesis developed by Capital author Thomas Piketty is set to be vindicated, with the most prominent critiques of inequality now economic.

Based on current trends, as research by Oxfam has found, a remarkable new threshold will be passed next year: the richest 1 per cent will own more than 50 per cent of the world’s wealth. The corollary is worth stating: the remaining 99 per cent will own less than half.

Inequality fell immediately after the 2008 financial crisis as incomes at the top and in the middle declined more sharply than those at the bottom (the poor having less to lose and being partly insulated by social security). But it has risen since, as quantitative easing has inflated asset prices, fiscal austerity has eroded welfare benefits and wages have remained depressed. The thesis developed by the French economist Thomas Piketty – that the gap will widen as long as the rate of return on capital exceeds the growth rate of the economy – appears destined for vindication.

The usual objections to inequality are moral. For Karl Marx, it represented the corrosion of our common humanity and the denial to workers of the products of their labour. For John Rawls, a society that did not redound to the greatest benefit of the least advantaged was one that no rational, self-interested individual would accept unless he or she was behind a “veil of ignorance”.

But the most prominent critiques of inequality are now economic. From the IMF, the OECD and the Bank of England, the message has gone out that the wealth gap is bad for growth. The uneven distribution of rewards threatens economic stability (as the poor are forced to borrow to maintain their living standards), reduces productivity and undermines social mobility. A recent study from the OECD estimated that the UK economy would be roughly 20 per cent larger if the gap between the rich and the poor had not become a chasm in the 1980s. It found that “income inequality has a sizeable and statistically negative impact on growth” and that “redistributive policies achieving greater equality in disposable income have no adverse growth consequences”.

It is this that explains why a subject once regarded as a leftist talking point again features on the agenda of the World Economic Forum in Davos, with 14 measures proposed to narrow the gap. Among them are more progressive systems
of taxation, increased trade union membership, higher minimum wages and greater investment in public services. Such remedies would once have appeared banal, but in the post-Thatcherite landscape they can seem daringly radical. The very legitimacy of the state as an economic actor is a belief that has to be fought for.

In the years since the crash, governments have focused on the immediate task of ensuring macroeconomic stability by repairing banking systems and reducing fiscal deficits. But as recovery takes hold, most notably in the US and the UK, it is right to ask more profound questions about the shape of modern capitalism. Rather than the trickle-down economics of recent decades, global leaders need to rediscover the virtues of Keynesian “trickle-up”. By increasing the disposable incomes of the poorest, governments and businesses will help to generate the growth on which capitalism depends. It is time for states not merely to listen but to act.

This article first appeared in the 23 January 2015 issue of the New Statesman, Christianity in the Middle East

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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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