Policy Press
22 The good, the bad and the ugly
Abstract
The pioneers of the discipline of economics had warned of the dangers of a rush to enrichment. Adam Smith spoke of the consequences of the love of quick money by ‘the prodigals’.1 In a modern-day equivalent, the former World Bank economist Branko Milanović has distinguished between ‘good’ and ‘bad’ inequality.2
Some of the personal wealth boom of recent decades has been associated with ‘good inequality’, the product of wealth and job-creating entrepreneurial activity and innovation which harms no one and adds to the common good. ‘Bad inequality’ arises from the exercise of disproportionate and unmerited power that brings negative consequences for wider society, such as through Wilfredo Pareto’s ‘appropriation of existing wealth’. Such inequality has always been a feature of capitalism, but became less prevalent in the post-war years before making a spectacular comeback. The wealth ‘megashift’ of the last thirty years is less a justified reward for promoting an innovative leap forward than a large windfall gain stemming from the new licence to get rich. The methods used for modern-day enrichment – the engineering of corporate balance sheets, growing monopolisation, the monetisation of social need, the selling off of socially-owned wealth and the overpricing of financial products, along with tax avoidance and wealth concealment – are a far cry from the culture of productive entrepreneurialism central to classical economic theory and advocated by Mrs Thatcher and Tony Blair.
From the millennium, the corporate buyout juggernaut gathered pace, with the total value of UK deals at twenty times that of the early 1980s. The multi-billion-pound deals of the time include the 1999 acquisition of Amoco by British Petroleum and the bitterly fought and titanic Vodafone takeover of Mannesmann in 2000.
Abstract
The pioneers of the discipline of economics had warned of the dangers of a rush to enrichment. Adam Smith spoke of the consequences of the love of quick money by ‘the prodigals’.1 In a modern-day equivalent, the former World Bank economist Branko Milanović has distinguished between ‘good’ and ‘bad’ inequality.2
Some of the personal wealth boom of recent decades has been associated with ‘good inequality’, the product of wealth and job-creating entrepreneurial activity and innovation which harms no one and adds to the common good. ‘Bad inequality’ arises from the exercise of disproportionate and unmerited power that brings negative consequences for wider society, such as through Wilfredo Pareto’s ‘appropriation of existing wealth’. Such inequality has always been a feature of capitalism, but became less prevalent in the post-war years before making a spectacular comeback. The wealth ‘megashift’ of the last thirty years is less a justified reward for promoting an innovative leap forward than a large windfall gain stemming from the new licence to get rich. The methods used for modern-day enrichment – the engineering of corporate balance sheets, growing monopolisation, the monetisation of social need, the selling off of socially-owned wealth and the overpricing of financial products, along with tax avoidance and wealth concealment – are a far cry from the culture of productive entrepreneurialism central to classical economic theory and advocated by Mrs Thatcher and Tony Blair.
From the millennium, the corporate buyout juggernaut gathered pace, with the total value of UK deals at twenty times that of the early 1980s. The multi-billion-pound deals of the time include the 1999 acquisition of Amoco by British Petroleum and the bitterly fought and titanic Vodafone takeover of Mannesmann in 2000.
Chapters in this book
- Front Matter i
- Contents xi
- List of figures xiii
- Preface and acknowledgements xiv
- Introduction: Knighthoods for the rich, penalties for the poor 1
-
1800–1939
- Hierarchical discipline 9
- Britain’s gilded age 17
- Public penury and private ostentation 27
- A roller-coaster ride 36
-
1940–59
- The future belongs to us 51
- Britain’s ‘New Deal’ 59
- Brave new world 65
- A shallow consensus 74
-
1960–79
- The rediscovery of poverty 83
- Poorer under Labour 90
- Consolidation or advance? 98
- Peak equality 105
-
1980–96
- Don’t mention the ‘p’ word 115
- Zapping labour 124
- The dark shadow of the Poor Law 133
- The great widening 144
- Money worship 152
-
1997–2010
- The elephant in the room 163
- Still born to rule 172
- I’m not Mother Teresa 177
- The house of cards 188
- The good, the bad and the ugly 198
-
2011–20
- Divide and rule: playing politics with poverty 209
- A leaner state 216
- Burning injustice 224
- Growing rich in their sleep 231
- Breaking the high-inequality, high-poverty cycle 239
- Afterword: COVID-19 and ‘the polo season’ 248
- Notes 253
- Index 289
Chapters in this book
- Front Matter i
- Contents xi
- List of figures xiii
- Preface and acknowledgements xiv
- Introduction: Knighthoods for the rich, penalties for the poor 1
-
1800–1939
- Hierarchical discipline 9
- Britain’s gilded age 17
- Public penury and private ostentation 27
- A roller-coaster ride 36
-
1940–59
- The future belongs to us 51
- Britain’s ‘New Deal’ 59
- Brave new world 65
- A shallow consensus 74
-
1960–79
- The rediscovery of poverty 83
- Poorer under Labour 90
- Consolidation or advance? 98
- Peak equality 105
-
1980–96
- Don’t mention the ‘p’ word 115
- Zapping labour 124
- The dark shadow of the Poor Law 133
- The great widening 144
- Money worship 152
-
1997–2010
- The elephant in the room 163
- Still born to rule 172
- I’m not Mother Teresa 177
- The house of cards 188
- The good, the bad and the ugly 198
-
2011–20
- Divide and rule: playing politics with poverty 209
- A leaner state 216
- Burning injustice 224
- Growing rich in their sleep 231
- Breaking the high-inequality, high-poverty cycle 239
- Afterword: COVID-19 and ‘the polo season’ 248
- Notes 253
- Index 289
