Tuesday, June 09, 2009

the failure of the trickle down strategy

The Trotskyist website WSWS has posted an interesting article on the failure of New Labour reformism .

For the last three decades the Institute of Fiscal Studies has produced a report on the UK Gini coefficient ( The Gini coefficient can range from 0 to 1 and provides an objective measure of income inequality, which allows every country to be ranked against others and against its own past performance. A coefficient of 0 would mean income is shared equally between all individuals, whilst a coefficient of 1 would mean one person within the population has all the income and everyone else none. So a higher Gini coefficient figure indicates a higher level of inequality ).

The figure has increased from 0.25 when Thatcher came to power to now 0.36, beyond the normal bounds of inequality seen in developed countries.

The report also notes that the number of those in relative poverty, which is defined as those with an income less than 60 percent of the median, has risen over the last three years.

“Poverty for working-age adults without dependent children is now at its highest level since the start of our comparable time series in 1961,” according to the IFS report.

The IFS report concludes, “Over the past three years, average living standards have continued to stagnate, though poverty and income inequality both rose. We expect that the current recession will again lead to a change in the course of poverty inequality and average living standards. Unfortunately, the only thing we can be near-certain of is that average living standards will fall, but we cannot be sure how this pain will be shared.” - i think we can guess who .

The contrast between rich and poor is even starker when the mean or arithmetical average is considered. The mean earnings figure for 2007-08 was £487 a week. It is calculated that 65 percent of the population earn less than this sum. A small proportion of the population, 1.2 million, has earnings above £1,500 a week. The incomes of Members of Parliament range up to £1,100 a week, putting them above 91 percent of the population. Only nine percent of households in the UK have a higher income. If their expenses are included in the calculation they have a higher income than 96 percent of the UK population. If they have a working partner, their household income is in the very top income bracket.

“Ten years ago the government committed to eradicating child poverty but these figures show progress has stalled,” Hilary Fisher, director of End Child Poverty said. “In the previous two years, child poverty actually rose. Progress has been made on child poverty, but the UK is way off track on its targets. Budget 2009 invested less than a pint of milk per week per child in family incomes and did nothing to narrow the gap.”

A Joseph Rowntree Foundation Report concluded that the measures brought in by the Labour government to address inequality were stalling.The report issued in February stated that “child poverty remains amongst the highest in Europe,” despite the fact that the government had focused on this area. Health inequalities also continued to widen.

“The UK’s experience in the 1980s and 1990s showed that the strategy of hoping that growth in living standards at the top would ‘trickle down’ to those at the bottom did not work."

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