Economic inequality is often portrayed as an inevitable force of nature: it’s a shame climate change is heating up the globe; and it’s sad that the rich are simply getting richer.
But there’s an increasing realisation that these things aren’t inevitable. Rather, there are deliberate, man-made reasons why this is happening. The top 1 per cent, via lobbyists or complex tax arrangements, for example, actively work to stop redistribution.
So, why does this matter to the rest of us? The vast body of available research shows that more equal countries experience less crime and imprisonment, better mental health, higher life expectancy and are socially and financially richer societies.
While all advanced economies are experiencing similar pressures that are leading to growing inequality, the levels of inequality are not the same everywhere. Latest figures indicate we are still a long way off the US and even the UK. But we are ahead of many of our European neighbours and a growing number of indicators are now pointing in the wrong direction.
A report by the think-tank Tasc, Cherishing All Equally: Economic Inequality in Ireland, contains some stark findings. One of them is this: we are now the most unequal country in the OECD when it comes to how the economy distributes income before taxes and social welfare.
Eroding
Granted, our social welfare system and public services significantly reduce this “market income inequality” to the point where we have average gaps between rich and poor in EU terms.
But as inequality grows , the Tasc report says, it will get harder and harder to maintain the tax and welfare system and prevent inequality eroding he wellbeing of our society, the functioning of the economy and even the health of our democracy.
With one in five workers on low pay, and with a relatively low overall tax take, the system in Ireland is in danger of being "stretched to breaking point", the report claims.
It also warned that calls from all sides in the political debate to cut taxes – instead of proposing investment in public services – will simply entrench economic inequality and mislead the public about the negative consequences down the line.
To stem inequality, it will be imperative to stop seeing the problem as intractable or inevitable: it will have to come down to choices.
“While we need to address the falling share of income and the weakening purchasing power of households, a new ethical economics must also take account of the global impact of climate change and resource depletion,” says Nat O’Connor of Tasc.
“In that context, increasing and broadening the provision of quality public services is a more important way of addressing people’s economic quality of life than increasing their cash incomes.”
The decisions made now, and in the run-up to the next election, will determine how society will develop over the coming decades. What’s less clear is whether any political parties will be brave enough to address inequality’s root causes.
