15 January 2016

Debunking the myths of "Inequality Briefing"

I was shown today Inequality Briefing's videos on wealth and income inequality, and I found myself smashing my head on the desk within seconds of them. I didn't know whether to laugh or cry. Wealth inequality's myths have already been debunked by a contributor to Forbes, describing it as "brain-curdling nonsense", but as far as I know, income inequality has not yet been disproved. 

"Brenda is an experienced nurse; [...] Brian is the boss of one of Britain's biggest companies."

We've not even got a fact yet and it's already ridiculous. In the United Kingdom, inequality is always going to arise due to the fact that the UK is a mixed economy: it is reasonable to presume that Brenda is a public sector worker, as 94% of all NHS operations are public sector, and Brenda apparently works at "one of Britain's busiest hospitals". The public sector is nationalised (by definition), and everyone knows that nationalisation does not work. It is extremely inefficient, thanks to hopeless central planning, and therefore a lack of market pressures upon wages (in either direction). By contrast, the private sector is free from government interference. Therefore, wages are free to go up or down to meet the demand of the market - according to the Independent, private sector wages are growing three times as fast as public sector ones. The private sector is, loosely speaking, meritocratic. The inefficient public sector is not. Therefore, we shouldn't even be comparing an NHS worker to a CEO.

"Wages for average earners like Brenda have hardly changed in a decade, whilst food prices are going up, and gas and electricity bills are rising."

Let's divide this one into three - "wages [...] have hardly changed in a decade" apparently. No, they haven't. If we take "a decade" to mean the period of 2004 - 2014, wage growth rose in real terms every single year until the "great recession" in 2008, and have done so again since 2014. "Food prices are going up", apparently, and "gas and electricity bills are rising". Now, seeing as I am unable to find tabulated data for gas and electricity for me to create my own graph, we'll just have to use one from one of the UK's major energy suppliers to retailers, which tracks retail pricing. But yes, as for wages and food, it's time for one of Benjamin's Blog's own graphs (because I know you love them really). According to the data at Trading Economics, we are now going to draw a line graph with two lines on it - average wage growth and food prices since January 2014 (thus keeping the video relevant, as it was produced in 2014). Are you ready? 

So energy prices are falling, food prices are falling, and wages are rising. Indeed, since January 2014, food prices have only risen in real terms in two out of 23 months (for which data exists). Forbes are right - inequality briefing, so far, is nothing but a bunch of brain-curdling nonsense. And we're still not even a third of the way through...

"Most people in poverty in the UK are actually in work."

This is referring to relative poverty, and therefore is not a sufficient measure. Living standards have, as we've seen above, been rising since January of 2014.

"As people on average incomes are increasingly squeezed, less money is spent on our high streets."

Even though we've already disputed the first clause of this statement above here, this statement nonetheless is a case of post hoc, ergo propter hoc - if two things occur at the same time and one assumes that one causes the other absurdly, this is a case of post hoc, ergo propter hoc. Why is this particular statement a case of the above? High street spending fell thanks to the recession, but it has been growing since 2013, and internet sales have increased all throughout this period. The Portas Review, released in 2011, and available here (don't read this from cover to cover, it's very boring), estimates that internet sales accounted for 50% of the growth of the retail sector between 2003 and 2010. The same report also predicts internet sales to rise substantially by 2015 - a prediction that was borne out to be true.

[Goes on to argue for redistributive taxation]

In terms of pre-taxation, the British Gini coefficient is actually one of the most equal countries in the world pre-taxation and transfers, according to the OECD. This means that the wage distribution in itself is actually what some people might describe as "fair". Even when you apply the taxation laws, our Gini coefficient drops further, and the amount of people in relative poverty in the UK is extremely small. So why do some countries drop further than others? Simple - it's the negative effects that redistribute taxation have. You can't stifle wealth creation at the top, otherwise they'll pack up and leave to other countries. And then there won't be any wealth. The businesses owned by the super-rich that others depend on will therefore close down too, as they can't afford to operate with these levels of taxation in the UK. Oh, oops, it's an essential service and a natural monopoly. Ah. That means that the people can't actually use the service at all now. That means that with redistribute taxation, we are all worse off. But still, for the people who have had their brains curdled, it doesn't matter that the poor are poorer, because we're more equal and the rich are less rich.

In any case, INCOME INEQUALITY IN THE UNITED KINGDOM IS FALLING. Don't believe me? Well, have a look at perhaps maybe the graph on the right, with data according to the World Bank? Still don't believe me? How about we try that Left-wing rag, colloquially referred to as "The Gruniad", thanks to its colossal backlog of spelling errors in the 1970s? Surely if this admits that anything other than a Labour government are reducing inequality, it must be true. It would be like the Daily Mail praising Jeremy Corbyn. And what's that, Gruniad? Income inequality in the UK is actually falling? Surely there's no disputing it now. Even in the global economy, income inequality is falling according to this article.

So, if you're from Inequality Briefing, stop scaremongering, and actually #ShareTheFacts.

Rant over.

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