Comment by jl6 12 hours ago
The Gini coefficient of the UK is about the same now as it was then:
https://equalitytrust.org.uk/how-has-inequality-changed/
What has actually changed? A whole bunch of other economic malaise, but also perceptions, amplified to your personal taste by social media.
Interest rates were much higher back then which accounts for most of the change. The base rate was around 6% through most of the nineties (it hit 15% at its peak).
And as with so many modern issues, the housing problem was largely created by Thatcher - her Right to Buy policy.
I couldn't disagree more! I think the housing cost issue is pure supply and demand, we have a country which doesn't like to permit building and an increasing population due to (legal) immigration.
I will bash Maggie all day, for her refusal to effectively manage industrial decline in Britain, for her boneheaded belief that a top-ranking economy could exist solely on services, and, most of all, for her idiotic squandering of our North Sea oil wealth. But, Right to Buy was a rare hit for me. I see it as having been a forward-looking policy which aimed to reward people for work -- play the game, and you too can have a tangible slice of society in the form of your own home to possess and care for as you wish. The problem is that we didn't replace the social housing lost to RtB.
> The problem is that we didn't replace the social housing lost to RtB.
We didn't fail that - Councils wanted to build more social housing with RtB and Thatcher viciously destroyed those programs. She created RtB not because it was a "forward-looking policy aimed to reward people for work" but because she hated the social security apparatus and wanted to destroy it. And she was never covert nor apologetic about it.
Right to Buy does not explain why the same trend is visible all over the Anglosphere, from Dublin, Ireland, to Wellington, New Zealand, to Sydney, Australia, to Vancouver, Canada.
The people don’t want housing built near them and the politicians listened. Lower supply than demand for decades leads to steadily rising prices. If you want to see the alternative look to Tokyo, Austin or Seattle. Build so much housing that the returns on investment are low and people can afford housing.
To me the biggest problem is the buy-to-let market, which means anything affordable is snapped up in seconds by people with money to invest, rather than people who just want a home to live in.
I think it's mainly a symptom of the unusualy low interest rates over the last 20 years: people have invested in residential property not because they particularly want to be landlords, but because it's perceived as the easiest way to get a better return on your money than a savings account that pays near zero interest.
I know of more than one person who's now looking to sell their rental property because they found out the hard way that "landlord" is actually a job title, not just the name of their savings account, that properties need to be maintained and that letting agents will find a way to swallow the vast majority of any profits.
I also know more than one person living in rented accommodation with appalling maintenance lapses. One had a shoddy roof repair last year which left the gutter missing. When the next rainstorm caused water to cascade down the outside wall and flow in above the back door, the letting agent had the nerve to shrug and say "old properties do that".
Another had a rotten wooden lintel above a street door scraped out, filled with expanding foam and painted over.
I vaguely recall a criticism of neoliberalism related to the emphasis on home ownership. Something about policy, homes being the primary vehicle for building wealth (vs say pensions), etc. And, ultimately, begetting NIMBYism.
I'm just repeating stuff I've heard. A lot of it feels like unintended consequences.
The NIMBYism part seems pretty clear.
If others have ideas, sources, rebuttals, please share.
Gini coefficient usually only measures income inequality. Wealth inequality is hard to measure for various reasons but…
https://equalitytrust.org.uk/scale-economic-inequality-uk/
“for the UK as a whole, the WID found that the top 0.1% had share of total wealth double between 1984 and 2013, reaching 9%.”
“If the wealth of the super rich continues to grow at the rate it has been, by 2035, the wealth of the richest 200 families will be larger than the whole UK GDP.”
Etc.
The super rich aren't the problem. 200 families is too few to have any meaningful effect on the housing market.
By all means tax them til their eyes bleed, but it'll mostly just make people feel better rather than being a useful contribution to public finances.
One is measured in pounds. The other is measured in pounds. Seems pretty comparable.
If you're being deliberately stupid you could pretend it's a comparison between pounds and pounds per year, but everyone who is at least minimally literate in the subject understands that "GDP" here means "the amount of value produced in a year".
https://en.m.wikipedia.org/wiki/List_of_sovereign_states_by_...
Very little change in U.K. over 20 years
It looks to me like Equality Trust put a fair amount of thought and research into their website, did their best to paint a picture of what's going on in the UK by using multiple reputable sources, and tried to explain why that picture is dire, not just for those with a net worth that rounds to £0 but for the nation at large, with several dozen citations to back that up.
Thank God we have this one number from some Credit Suisse marketing material to invalidate all of that.
Gini is a very rough tool. It’s trying to describe the shape of a curve with a single number. It describes the average inequality between any two people.
The curve can be skewed without the Gini number changing significantly if, say, the bottom 99% became increasingly more equal in income/wealth by becoming poorer overall, transferring income/wealth to the upper 1%.
I the numbers maybe not, but in the public perception? In society?
Highly unlikely because the rich are now just running away from UK pulling all their cash with them; it's likely that leftists will get what they want - reduction of wealth inequality - just not in the way that pleases them: with the cash being simply gone.
Sounds good to me. The problem is the rich don't actually take their money and fuck off, they just keep owning wealth here forever. I expect that won't change until the UK gets an actual leftist government, which seems unlikely to happen in the next 10 years.
Switzerland and Afghanistan have an almost equal Gini coefficient.
My point is: the Gini coefficient might indicate what your country's income distribution looks like, it however does not tell anything about actual life conditions.
Quality of life encompasses many factors, e.g.
Switzerland has 98 days of maternity leave,
Afghanistan has 90(+15) days of maternity leave
(Wikipedia even puts it at #1 worldwide with two years,
but that may be incorrect?).
In Switzerland, women have been able to vote since 1971.
In Afghanistan, women have been able to vote since 1919
(but interrupted during the *previous* Taliban regime).The Human Development Index, on the other hand, does. Switzerland is #1 at 0.967, improving at 0.25% per year. Afghanistan is #182 at 0.462 and dropping, the UK is a respectable #15 at 0.940 (between Finland and New Zealand) and also improving.
Again, gini coefficients or GDP growth measures are, at best, proxies to understand the conditions the bottom decile of your country lives in.
Looking at housing costs, life expectancy, food insecurity or poverty rates do a much better job at capturing this.
>What has actually changed?
The value of grants paid from central government to local government have fallen by over 80%. In 2005, the poorest local authorities received most of their funding from central government; today, they're dependent on council tax and business rates for the vast majority of their income. During that time, demand for social care has vastly increased, disproportionately so in the poorest local authorities, eating away at the already shrinking resources of local authorities.
The result of those cuts have been drastic for people living in poorer communities, particularly the poorest members of those communities. They quite justifiably feel abandoned by society. Youth clubs and children's centres, social work, homelessness provision, subsidised bus routes, parks and libraries have all been cut to the bone. None of that is captured in the Gini coefficient, but it's felt acutely by the people who rely on those services.
The wealthy are largely unaffected by this, because they live in local authorities that were never particularly reliant on central government funding and because they never really relied on council services anyway. For the very poorest, the impact of austerity is often dominated by one big failure of provision - being stuck in unsuitable temporary accommodation for months or years because there's no social housing available, being denied support for a disabled child etc. For the majority, it's just a slow but pervasive erosion of their quality of life - their kids have nowhere to go after school, their street is full of potholes, the bus they take into town has been cut from four an hour to one an hour, their back alley is full of rubbish because the council can't afford to deal with fly-tipping.
https://neweconomics.org/uploads/files/NEF_Local_Government_...
https://www.jbs.cam.ac.uk/wp-content/uploads/2023/05/cbrwp51...
The share of the middle 40% has fallen sharply according to the bottom chart on that page.
The bottom 50% is unchanged in aggregate , but there will be groups within in that have done a lot worse.
I would also guess (I cannot find numbers) that the proportion of income that is spent on essentials has risen.
I think the argument is less that inequality has increased overall, and more that the country is increasingly stratified by geography - with greater concentrations of wealth in the South East relative to the rest of the country.
This is especially true in formerly undesirable areas of London (e.g. Hackney, #10 on the 2003 list) and towns within commuting distance of London (e.g. Hythe, #3).
Presumably this is due to the gradual shift to a London-centric services economy as well as the increasingly ludicrous price of houses in Central London.
“About the same” is not “the same”, and there are tipping points. The gini coefficient has still seen a decent bump.
But anyway, gini is a coarse measure. Look at the chart below that, showing income percentages going steadily upwards for the top 10 and 1%.
Most worryingly, look at the decline of the middle 40%. A healthy middle class keeps countries stable. You need a good chunk of society who feel like the system works for them.
And it’s not just perceptions, it’s fundamental stuff. A teacher could afford a house in the 90s; they can’t now. For all the boomers bang on about mobile phones and flat screen TVs, in the end those are luxuries compared to clean, secure accommodation. The days of getting a mortgage on one income, or having access to nice council housing are gone.
What has actually changed is that thirty years ago, the ratio between house prices and average earnings was about 4. By twenty years ago it had doubled and, most importantly, it has been at that level ever since with no real sign of dropping [1].
This is a structural change. We now have at least one, and perhaps two, generations of people who can't really alter their economic situation through hard work. That's the classic recipe for populism to thrive.
[1] https://www.schroders.com/en-gb/uk/individual/insights/what-...