Ed Miliband's message of inequality deserves a second airing. Photo: Getty Images
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Inequality isn't just bad for people at the bottom of the heap, it's bad for everyone

Inequality hits the rich and the poor alike, says Debbie Abrahams.

Yet another study has just been published showing that the UK is one of the most unequal countries in the world. In their report, the International Monetary Fund (IMF) says that ‘widening income inequalities is the most defining challenge of our time’. Forty years ago, 5 per cent of income went to the highest 1 per cent of earners. Today it is 15 per cent. Spare a thought for our cousins across the Atlantic; in the US the figure has risen from 8 per cent to 20 per cent. This trend of increasing income inequalities has occurred in most high income countries, but some less so than others.

This work follows on from another IMF report which came out in support of Nobel economist, Joseph Stiglitz’s analysis that inequalities are a drag on growth and can also make growth more volatile. The Organisation of Economic Co-operation and Development (OECD) has similarly rejected the ‘trickle down’ economics of the 1970s, so popular with Margaret Thatcher and other Thatcherites; this supposed that increasing wealth at the top would ‘trickle down’ to the rest of the food chain and that policies aimed at reducing inequality would reduce incentives and slow growth. Now the evidence is clear: inequalities have slowed not increased growth. Raising the income share of the poorest 20 per cent of the population increases growth by as much as 0.38 per cent over five years. By contrast, increasing the income share of the richest 20 per cent by 1 per cent decreases it by 0.08 per cent. In the UK, the Institute of Fiscal Studies (IFS) has shown that working people on low incomes, particularly families with children, have lost proportionately more of their income than any other group since 2010 as a result of tax and benefit changes. If cuts to public services are added to this, the disproportionate negative impact on people on low income is even starker.

In addition to income inequalities there are also inequalities in wealth (assets) with land and property being the largest real assets. In 2002 it was estimated that 69 per cent of the land was owned by 0.6 per cent of the population. In the six years to 2011 the number of landholdings had reduced by 10 per cent but the size of these holdings had increased by 12 per cent. So even fewer people own even more land. Many in housing policy emphasise that if we’re to solve the housing crisis in addition to building more homes, we need to tackle the cost and availability of land and address the volatility in the market. With average house prices in the UK over £180,000 (over £460,000 in London), it has been estimated that it would take 22 years for people on low and middle incomes to save for a deposit. As a result many young people, but not exclusively, are living with their parents, or are renting, the so-called ‘Generation Rent’. Inequalities are now becoming intergenerational.

Unfortunately, the Government’s policy measures have exacerbated these inequalities with the further concentration of land and property assets in the hands of a tiny elite. By waiving the mandatory quota of affordable homes in new housing developments, the Coalition allowed developers to build more properties for rent in the private rented market and by deregulating what is already the least regulated private rental sector in Europe, they opened the door to rogue landlords. After using £12bn of taxpayers money to guarantee £130bn of new mortgage lending, the ‘Help to Buy’ scheme will do little to help renters become buyers; instead it has fuelled increases in new house prices and will generate yet more private sector rented accommodation, as many owners either sell or rent out their property after the Government subsidies end. And extending the ‘Right to Buy’ to people renting homes from housing associations may increase home ownership but without building more social housing (currently at a 20 year low), it just reduces the supply of affordable homes for people on low incomes to rent.

Inequalities are not inevitable. In the UK after a decline in the share of all income received by the richest 1 per cent after World War 1 until the 1980s, the trend was reversed with a sharp rise in the accumulation of income until around 2005/6. There are various ways inequalities are achieved and then perpetuated. Regressive economic policies with the total tax burden falling predominantly on the poorest combined with low levels of public spending, especially on social security, are key. When wealth and power are concentrated in a tiny elite, there tends to be less investment in education, health and infrastructure, which particularly benefits people on low incomes and enhances productivity. In the last 5 years, for example, public spending as a percentage of GDP, fell in health from 6.6 per cent in 2009/10 to 6.1 per cent in 2015/16 and in education from 3.8 per cent to 3.1 per cent. In addition to reducing investment, Coalition policies from reducing access to education (by trebling tuition fees, scrapping education maintenance allowance), to facilitating exploitative, labour markets (poor quality jobs, zero hour contracts, deregulation) and restricting access to justice (with legal aid and judicial review changes), have further contributed to maintaining power with an elite.

But to do this requires buy-in from the voting public. To this end there has been a championing of the market and consumerism. ‘Get rich quick’ schemes like the 1980s British Gas ‘Tell Sid’ shares sell off symbolised this; ordinary people were sold an illusion – that elitism was good and that they could be part of it. At the same time the Thatcher Government started the commoditising and marketization of public services such as healthcare. The Labour Party hasn’t been completely blameless in this; as Chair of an NHS Trust in 2006 I remember warning the then Health Secretary of the dangers of pursuing the blatant promotion of healthcare consumerism under the illusion of ‘choice’, equating personalised care with a personal budget. Fortunately her successors listened.

Accompanying the praise of materialism, has been an insidious spreading of a culture of blame and fear. In the 1980s, the unions were the target, today the focus is on the poor and vulnerable. The narrative associated with the so-called welfare reforms has been one of ‘divide and rule’, deliberately attempting to vilify people receiving social security as the new undeserving poor. By using pejorative language such as ‘shirkers’ and ‘scroungers’ the Government has intentionally attempted to demonise social security recipients when in fact most of the social security budget is spent on pensioners. The regular misuse of statistics is another way the Government is trying to harden the public’s attitudes to the welfare state. And this is set to get much worse as the Government prepares to cut £12bn from the annual social security budget in July’s budget, including potentially slashing tax credits for the working poor as well as support for working age people with disabilities. But fear and blame is not just the preserve of the Conservative's and it must be resisted at all costs.   

Once again the Government justifies their regressive economic policies by blame and innuendo. Their policies are not about securing the UK’s economic future or balancing the books and they are certainly nothing to do with enabling everyone to get on; they are all about ensuring power and wealth is retained by a privileged few.

There is now overwhelming evidence of the wider effects of these inequalities on a range of factors. Nations with a wider gap between rich and poor have higher levels of infant mortality, lower life expectancy, less social mobility, higher crime levels, lower educational attainment. The UK imprisons more people than anywhere in Europe, in contrast Sweden has had to close jails because of a lack of prisoners. In some parts of the UK, life expectancy for men is lower than for men in India, with health inequalities between the rich and poor – the gap in life expectancy – increasing to 8 years for men and 7 years for women, as wide as the gap between the UK and Nicaragua.

Fairer, more equal societies don’t just benefit poorer people, they benefit everyone. In addition to enhanced growth and productivity and a reduction in pressure on public services, there is also evidence of greater levels of happiness and trust. In his evidence to the Oldham Fairness Commission which I established, Professor Richard Wilkinson said of unequal societies:

There are deeper issues [associated with inequalities] such as a decline in whom we trust and concerns about how people are judged. These higher levels of anxiety increase across all population groups in unequal societies. It is the gaps between people that are important."

Knowing how inequalities stifle growth and damage society, as well as how they are perpetuated, what can we do about them? There is evidence that Britons want a fairer society. In a recent time-series analysis of British Social Attitudes survey data on welfare spending, 93 per cent of Britons born after 1979 reported that they would prefer to either increase taxes or keep them the same in order to support health, education and social benefits. The data also refutes the claim that the young are especially unsympathetic to the needs of others. This age group is the most likely to agree with maintaining support for both disabled people and low-income working parents.

So as a starting point any Government proposals to further cut social security support for the low paid, families with children or for people with disabilities need to be strongly opposed by Labour; cuts to housing benefit need to be linked to reforms with the housing market. Spending in education, health and international development as a percentage of GDP needs to be protected; over the next 5 years Labour needs to redefine what the welfare state for the 21st century should look like.

Labour needs to work with willing local authorities to introduce the living wage in all sectors as early as possible by, for example, linking this to business rate discounts as Brent Council has done. At the same time we need to be putting pressure on the Government to support employers to do this, for example through tax rebates.

For small businesses, the backbone of the economy, and woefully supported by the last Government, three key issues need to be addressed to enable them to flourish and productivity to increase: access to finance, business rates and late payments. Again we can work with local authorities on these, for example, by providing business loans and finance, both directly and indirectly through funding circles, to local businesses. Through local procurement, councils are also central to supporting their businesses and the local economy; but they can also help address issues in the labour market, from low quality apprenticeships, or zero hour contracts to disability employment gaps.

Housing costs are still the major cost to individuals and families. Whilst supply issues are being addressed, regulatory reform of the private rented sector is essential. Other areas to investigate include the potential of a land and property tax as Ireland have just introduced and how can we ensure support for home ownership particularly first-time buyers, rather than ‘buy-to-letters’.  

The Government is unlikely to have a Damascene moment any time soon regarding fair taxation – where the total tax burden for people on low and middle incomes is not more than people on higher incomes as it currently is, and individuals and corporations are tackled about their aggressive avoidance or evasion in paying the taxes they owe – but this has to be a Labour goal.    

Finally our politics needs to change. Empowering all of our citizens by actively engaging them in decision-making, not the passive piecemeal ‘consultation’ after decisions have already been made. This needs to be a new way of working, where politicians, local, national and beyond, are truly accountable every day not every few years at the ballot box. This has to be the politics of the future. With this we will rebuild trust from the people we serve. Devolution is part of this, but we must ensure that this isn’t just about devolving risk, as this Government appears to be doing, or adding another layer of bureaucracy at a local level and that every part of the country benefits not just our city regions. We’re not going to be able to stop all the havoc this Government is about to unleash and the impact this will have on inequalities, but we may be able to mitigate some of their effects at a local level. And it starts with our vision of hope for the future, where everyone can get on and no-one is left behind.

Debbie Abrahams is shadow work and pensions secretary.

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After the defeat of Hillary Clinton, what should the US left do next?

For disappointed Bernie Sanders supporters and others on the left, the big question is now: should they work within the Democratic party?

For the majority of the US left, Hillary Clinton’s electoral defeat came as a surprise. Sure, they’d had doubts about her candidacy from the start. They’d expressed disgust at her platform, history, priorities and dubious associations – not least, at her campaign’s focus on cosying up to wealthy elites, courting the support of billionaires such as slum landlord Warren Buffett, at the expense of trying on to hold on to the party’s core working-class vote – but the general belief was that, however undeservedly, she’d still manage to pull it off.

After all, polling suggested she maintained a fairly consistent lead in key swing states even as Trump somewhat narrowed the gap, and there was reason to think that demographic trends would work against her competitor, who openly courted white supremacist votes.

Hindsight is 20/20, but many now feel they took their eye off the ball.  Leslie Lee III, a writer from Louisiana currently residing just outside Washington DC, argues that people “got so worn down by the polls that we forgot our message, that Clinton was the worst possible candidate to put against Trump”. For him, identifying what went wrong is simple:  “Trump promised people something, the establishment candidate was telling people America was already great. It doesn’t matter if he was doing it in a dishonest, con-artist, racist, xenophobic, sexist way – he said he’d fix people’s problems, while Clinton said they didn’t have problems”.

Leslie isn’t alone in believing that a wonkish focus on polls and data distracted from what was really going on. Everyone I speak to feels that the supposed ‘experts’ from the liberal mainstream aren’t equipped to understand the current political landscape. “We are witnessing a global phenomenon,” suggests writer Amber A’Lee Frost, who first got involved with the Democrats to support the Sanders campaign but voted Obama in 2008. “The UK offers the most clear parallel to the US. Nationalism, racism and xenophobia are festering.” Student and Democratic Socialists of America activist Emily Robinson agrees: “All across the world we’ve seen massive right-wing upswells, from Trump, LePen and May in the West to Modi and Erdogan in the East.” Whatever differences exist between these respective politicians, it’s hard to argue with the contention there’s been a widespread shift to the right.

US left-wingers argue that liberals fail to understand their own role in the current situation. From a British perspective, it’s hard to disagree. Repeatedly, I’ve seen discussions shut down with the claim that even acknowledging economy policy may have contributed to the resurgence of ethno-nationalist ideology amounts to apologism. Nor can faulty data be held entirely responsible for any complacency. In the run-up to the Brexit vote, polls suggested that the result would be too close to call; nonetheless, within the liberal bubble almost everyone assumed we’d vote to remain. The fact the value of the pound rose on the eve of the referendum was seen as evidence for this belief, as if currency traders have some sort of special insight into the mind of the average UK voter. Looking back, the whole thing is laughable.

Over in the US, the disconnect seems to be much the same. “People in the street weren’t following that stuff,” Leslie says of the finer details of both the Trump and Clinton campaigns. “Trump said he would fix their problems, Clinton said they didn’t have any. If we’d stayed focused on that it would have been obvious.” Instead, many of her supporters believed that it was Hillary’s turn and consequently dismissed substantive criticisms, sometimes claiming the vast majority of opposition was simply latent sexism. Even the campaign slogan “I’m With Her” seemed to be about what voters could should for Clinton, not what Clinton would do for them. As polls narrowed, party insiders continued to insist that Clinton was the rightful heir to Obama’s voting coalition, however little she actually did to earn it. 

A lack of message simplicity definitely seems to have been part of the problem. When I speak to Christian, who currently works in outreach and recruitment for the Democratic Socialists of America’s national office, he admits he was barely aware of the platform Clinton was campaigning on. “I’d ask my friends, and sometimes she’d talk about stuff, but it’s so vague,” he explains. “The average working-class person shouldn’t have to go to a website and read a 30 page policy document. It feels like it’s written that way for a reason, it’s muddled, neoliberal bullshit that lobbyists have written.” It’s true that media coverage probably didn’t help, with reporting frequently focuses on gossip and overblown scandal over substantive policy issues, but an effective political communicator must ensure their core messages cut through. Obama managed it in 2008, and however abhorrent we might find it, pretty much everyone heard about Trump’s wall.

It’s also hard to ignite excitement for the continuity candidate when many people don’t believe that the status quo actually benefits them. “I think neoliberalism no longer works as an electoral incentive to voters, especially working-class voters,” argues Amber. Emily tells me that prior to this election she’d worked on two Democratic campaigns, but before Sanders she’d been ready to give up on the party. “When they had the power to, the Democrats failed to implement policies that helped the working class, Hispanic, Black and Muslim communities, and women.”

She explains her disappointment during the early part of Obama’s first term, when the Democrats held the House, Senate and Oval Office. “They jumped away from the single payer option for healthcare, which would have helped the entire American population. The implementation of the DREAM act would have helped immigrant communities. There’s also a lot they could have done on policing and carceral reform, repealing federal use of private prisons, for example, and labour rights, by introducing federal protections for trade unions and effectively repealing so-called ‘right to work’ laws in many states. They did not mandate free, universal pre-kindergarten nor did they even attempt to work forwards free collect – or, at the bare minimum free community college.”

For Douglas Williams, a graduate student at Wayne State University, it was Obama’s relationship with labour unions that caused him to drift away from the party. “In 2013, Barack Obama appointed a union buster to a federal judgeship in the District of Columbia. I started to think, labour gave $1.1 billion to national Democrat party politics between 2005 and 2011, and labour got literally nothing from it.”

One left-leaning activist, who prefers to be identified by his blogging pseudonym Cato of Utica, campaigned door-to-door for Clinton. He explains in visceral detail his disillusionment with the party he’d worked within for roughly a decade: “I was heavily involved in North Carolina in places where the recovery never even touched. These were working poor people, and the doorbells didn’t work. If the doorbells are broken, what else is broken inside the house? What else isn’t the landlord taking care of? I looked at our candidates and none of the people I was pushing were going to address the problems in these people’s lives.”

Much ink has been spilled trying to pin down exactly what motivated people to vote Trump, whose campaign rhetoric was more explicitly xenophobic, racist and sexist than any other recent presidential candidate. Most of his supporters also voted Republican in previous elections, but two other groups are more interesting from a left-wing perspective: those who previously voted Obama but opted for Trump this time round, and non-voters who were inspired to make it to the polling booth for the first time. Overwhelmingly, both groups are concentrated in lower income categories.

“I think people voted for Trump because he acknowledged that there is something very wrong with America,” suggests Amber. “I obviously disagree with Trump voters on what is wrong with this country, and the fact that his campaign was fuelled by nationalism and racism certainly gave it a terrifying edge, but I know why they voted for him, even though he will ultimately betray his most vulnerable supporters.”

It would be absurd to discount racism as a factor in an election where the winning candidate was endorsed by the official newspaper of the Ku Klux Klan and its former leader David Duke, but Leslie disagrees with those who claim it was the primary motivation for the most Trump voters. His earliest political memory is from around 4th or 5th grade, when David Duke was running for Governor of Louisiana. “As one of the few Black kids in your class,” he recalls, “it really makes you realise how important politics is early on”. One of his closest friends was a previous Obama voter who opted for Trump this election, and the common factor seems to have been a message of optimism.

“Obama offered something more important than these people’s prejudices: hope and change, basically. He didn’t deliver it but he offered it. Romney was seen as the establishment. Obama said, ‘I’m an outsider and I’ll bring something new to the table’. There’s a line between Trump and Obama in that vein – and my friend will tell you the same.”

At a time when many people have a strong desire to kick out at the political establishment, Clinton was the ultimate establishment candidate. Leslie is scathing about the extent to which she actively highlighted this in her campaign: “She talked about being experienced – what does that mean? It means you’ve been part of the establishment. She attacked Obama with her experience in 2008 so I don’t know why she thought it would work. It’s not like being the local dog catcher, you don’t turn in your resume and if you have the most experience you get it. You need to have a message and get people inspired, and she didn’t have it.”

Most of the people I speak to believe that Sanders would have had a better chance of beating Trump, and many poured significant time, effort and money into his campaign. They note that polling showing Sanders had consistently higher approval ratings amongst the general public than Clinton throughout the primaries, and argue that people citing recently released unused opposition research as evidence he’d have lost don’t understand voter motivations. The idea that Sanders’ experience of being poor and unemployed would have worked against him is seen as particularly mockable. Whatever the truth, the more relevant question now is what the left does next.

Opinion is split between those who think working within the Democratic Party is the best approach and those who believe its unaccountable, bureaucratic structures make it a lost cause. Emily is in the first category. “I think leftists should, in a limited capacity, be running within what is now the desiccated carcass of the Democratic Party, rather than naively attempting to build a party from the ground up and risking splitting the left-liberal vote,” she tells me. “They should be prepared to run for elections with a (D) next to their name, even if they refuse to bend at the knee to the neoliberal, imperial tendencies of the Democratic elite.”

Particularly exciting right now is the work of the Democratic Socialists of America, an organisation which aims to shape the future of the party in a leftwards direction. Membership had increased by a third since the election – aided partly by support from celebrities such as Killer Mike and Rob Delaney. “We’re planning on Trump being a one-term president,” DSA representative Christian tells me. “We have a 50 state strategy, but right now we only have chapters in 31 states. It’s not just about elections, it’s threefold: electoral, workplace and community organising to win on all counts.”

Douglas is sceptical about whether it’s possible to restructure the Democratic Party in the way he considers necessary, but he agrees with the DSA’s focus on community organising: “Why can’t an organisation be like ‘we’re going to sponsor a little league team’? Why can’t we open a soup kitchen? We’re making noise, we’re out here, but we heard your aunt is having trouble with her roof. We’ve got guys who can fix that, and then we’ll leave a little sign saying it was us.” Cato of Utica references something similar that happened in Flint, where the Plumbers and Pipefitters Union visited people’s homes to make sure their water filters were properly fitted.

“We need to rebuild the labour movement,” agrees Emily. “Not only to carry out all the normal functions of unions, but also to provide a community, and spaces for education, child care and other forms of support. If we don’t build solidarity among the working class – not just the white working class, but the Hispanic working class, the Black working class and so on – we risk allowing another reactionary movement caused by cleavages promoted by the ruling classes.”

Left-wing organisations traditionally target places like New York, Los Angeles and Chicago, where it’s easier to build support. Christian argues that the Democratic Party, and the DSA specifically, need to “focus on the Rust Belt, where the Democrats lost, and the South, where Bernie lost”. There’s a widespread belief that Southern states which have been Republican for decades now could be winnable in future presidential elections, partly because of demographic trends pointing towards increasingly ethnically diverse voting populations. As for the Rust Belt, it’s hard to argue with the claim that a different candidate could do better than Clinton – who didn’t even bother to visit Wisconsin, which swung Republican, in the months preceding the vote.

The DSA’s 50 state strategy involves creating a national framework, but with devolved power allowing local chapters to focus on the issues most relevant in their area. “In Texas our chapter is really strong and we do a lot of work on immigration reform, working with undocumented communities, whereas Boston obviously doesn’t have to deal with that so much,” Christian explains to me. “In places like Kentucky and West Virginia, coal country, Republicans like Trump will say coal is coming back. We say we actually need to transition to a new economy and create green jobs, and places where people live where they don’t get cancer from coal.”

Christian believes that the unexpected success of the Sanders campaign indicates there’s an appetite for the kind of politics the DSA is offering, and that a similar candidate could gain the Democratic nomination in four years time. “Having a candidate announce earlier than Bernie did, and with a good ground game in place, we could have 50,000 volunteers ready to go. We wouldn’t be scrambling around this time, we’d be ready to go to war with [Trump]”. Like many on the left, he thinks that Keith Ellison’s selection as DNC chair is a crucial part of the puzzle. Ellison was the first Muslim elected to Congress and is chair of the Progressive Caucus. “He’s a way better politician than Bernie,” Christian contends. “He understands the intricacy of talking about labour, poverty and unions very well.”

Others I speak to argue that focus should be on working from the ground up. “I’m not even talking about state legislatures,” explains Douglas. “I mean city councillors, school boards, things like that. This is going to be a long-term project and has to start at the absolute lowest level and work its way up. People don’t even realise, in some of these cities you can get elected to the city council on 500 votes. We want to start on the big stuff but it has to be an independent, left local movement. We can run all the candidates we want, but unless we’re out here informing people ‘it’s not actually about Mexicans or Muslims, it’s your boss, it’s his fault you can’t afford to save the money to send your kids to college,’ what’s the point?”

Whatever disagreements about strategy exist, the US left seems to be united by two things: fear of Trump’s presidency and a determination to succeed. Many members of the DSA are worried about their involvement with the organisation being publicly known. Unsurprisingly, this is more acute for members of groups attacked in Trump’s rhetoric. “We see apprehensiveness with some of our Latino membership,” Christian tells me. “People don’t want to out themselves because that's risking your own livelihood. We’re a working class organisation and most people have other jobs.”

With Trump associates making noises about recreating the House Un-American Activities Committee, some fear left-wingers could be targeted as dissidents as in previous decades. However realistic the threat of government persecution, there’s already a far-right website, KeyWiki, that keeps tabs on members of socialist organisations. Everyone I speak to agrees that groups particularly vulnerable to being targeted by Trump and his supporters – including Muslim, Latino and African American communities – must be defended at all cost. “The aim of the left should be to make it impossible for Trump to govern,” says Cato of Utica. “Establishment Democrats are already making conciliatory noises. If the Democrats aren’t going to do it in the Senate, the people have to do it in the streets through direct action.”

When I ask Amber what happens next, her response seems to sum up the mood amongst the US left: “To be honest, I have no idea. I’m terrified but I am ready to fight.”