The affordability of staying in the Union – part 1

Posted by Euan Bennet on 20/09/2013

This is a companion piece to yesterday’s. The question that is never asked by the media is “can we afford to stay in the Union?”, yet it is becoming clearer that this is an issue that people are going to have to consider. In order to make an informed decision one must investigate both options in equal detail. There are no guarantees under the Union just as there are no guarantees with independence, but there are plenty of indicators for how both could turn out. In order to assess how things might get better or worse, we should establish a baseline of how things are now, and how we got here. After all, the best way to predict future behaviour is to look at past behaviour.

We frequently see the Yes campaign making the assertion that the UK is the fourth most unequal country in the Western world , so let’s take a look at the figures to see how they stand up.

Economy and Inequality

Let’s start with the headline points. The UK is the 6th richest country in the world in terms of total GDP. Sounds great, except when you look at how that wealth is distributed. The UK is the seventh most unequal in the OECD.  Wikipedia has handily already compiled historical figures into a nice table. Three of the countries in the OECD that are more unequal than the UK are Mexico, Chile, and Turkey. There are several definitions of “developed country”, but for example this list (citing page 166 of this report) shows that if we do consider only developed nations, the UK is indeed fourth most unequal: behind the US, Portugal and Israel.

The wealthiest 10% of UK citizens are 4.4 times better off than the bottom 50% combined. 62% of total wealth is owned by the top 20%, while the bottom 50% own just 9% of the total wealth between them. The latest figures from 2010 show that the UK has become more unequal compared to the previous figures from two years earlier.

Since 2010 there has been further increases in inequality, which have been contributed to by the public service and welfare cuts implemented by the current Westminster government (figures on page 27 of the report that links to). Successive budgets have made an indirect transfer of wealth from the poorest three deciles to the richest two.

Other highlights

These statistics are entirely a reflection of policies pursued by successive Westminster governments. They represent choices that have been made.

Making an informed decision

One of the questions that the media should be asking in relation to the referendum debate is: how did the circumstances arise in the sixth-wealthiest nation in the world where inequality is so bad that over a quarter of children live in poverty? Anyone who may yet decide to vote No in the referendum should at the very least examine the figures cited above and make sure that they are comfortable in voting to endorse a system that has systematically and continuously brought the UK to this economic scenario, because that is exactly what a No vote will be interpreted as – an endorsement of the system. How could it be interpreted otherwise?

This post is not intended to be a whinge about policies that I don’t like – it is intended to be a reality check of the situation that the UK is in. Nor is the post an effort at negative campaigning – I am simply asking that people acquaint themselves with the reality of the economic situation in the UK today, and that they understand that this situation is the result of choices made by successive Westminster governments.

 

[Updated 8.20am 24/09/2013: added more links to clarify “4th most unequal in West… 7th in OECD” statement.]

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4 thoughts on “The affordability of staying in the Union – part 1

  1. Ross

    What your trying to do here is great but you need to reference every figure you quote, and probably also explain differences.
    For example, the uk cannot be the 4th most unequal country in the world AND the 7th most unequal in the OECD, because the OECD is a subset of the world. The inconsistency may be down to differences in timing and/or methods used but you need to reference each and explain or else it makes no sense.
    Also, note Wikipedia summaries of these type of economic and development indicators are an excellent resource because they use multiple references independently verifiable, all in neat tables not hidden way.
    E.g.
    http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita
    Which is much more relevant than absolute GDP as it lets us compare wealth per head of UK with small countries that are like Scotland (but with less natural resources etc)…

    I hope these suggestions help.
    Best wishes with developing your blog!

    Reply
    1. juanbonnets Post author

      Hi Ross, thanks for taking the time to comment.

      The stat that the Yes campaign quote is that the UK is the fourth most unequal in the Western world, but the OECD includes Chile, Mexico, and Israel ahead of the UK on their overall list. I did originally include a link to this article: http://www.huffingtonpost.com/2011/05/23/10-countries-with-worst-income-inequality_n_865869.html#s278238&title=7_United_Kingdom but later decided to only cite the actual figures and try to avoid newpaper articles talking about the figures. Maybe it would be clearer if I add that link back in? I’ll take another look at the post and try to improve the clarity of the “4th in West… 7th in OECD” statement.

      On Wikipedia, I instinctively tried to avoid referencing it but I do take your point that where properly referenced the tables are very nice and clear.

      More generally, I’ve been trying to give page numbers when the official figures are very long-winded but certainly will have missed some, I will take another look.

      Thanks again!
      Euan

      Reply
  2. Pingback: Poverty and inequality – the past, present and future of the Union | The Science of Independence

  3. Pingback: Euan’s Ramblings: collected for reference | The Science of Independence

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