Four experts give their view at a British Academy debateby Sameer Rahim / October 17, 2016 / Leave a comment
“Without justice, society must immediately dissolve.” The words of Scottish philosopher David Hume were quoted by Stewart Sutherland, Chair of the British Academy debate held on 4th October in Edinburgh, which was entitled “Inequality: Good for the rich, bad for the economy?” Sutherland asked what exactly “justice” might mean in a modern meritocratic society. Over the next hour and a half, four expert contributors and an erudite audience set out to find some answers to these questions.
Richard Blundell, Director of the Centre for the Microeconomic Analysis of Public Policy at the Institute of Fiscal Studies (IFS), said that with regards to inequality, there is “a growing consensus that something is going on,” and that “something must be done.” According to the IFS, those born in the 1980s in the UK were the first post-war generation not to enjoy higher incomes than those born in the previous decade. “The Gini coefficient,” a common measure of inequality, “has moved 10 points from 0.25 to 0.35” in the last 30 years said Blundell. “We have moved from a Gini you would typically find in Scandinavia [or] Germany to a Gini that you would find in North America.”
Although inequality has been a problem for many years, its effects were partially ameliorated in the 1990s by a number of factors, said Blundell: “the unprecedented increase in education attainment,” for one; as well as New Labour’s working family tax credits. In the main, though, the governments of the day thought that a flourishing economy would go hand-in-hand with reducing income inequality. After the financial crisis that consensus was obviously shattered.