• Privacy policy
  • T&C’s
  • FAQ
  • Meet the Team
  • About The London Economic
  • Advertise
TLE ONLINE SHOP!
NEWSLETTER
SUPPORT THE LONDON ECONOMIC
  • TLE
  • News
  • Politics
  • Opinion
  • Business
  • Sport
  • Entertainment
  • Film
  • Food
  • Lifestyle
  • Property
  • Travel
  • Tech/Auto
No Result
View All Result
The London Economic
  • TLE
  • News
  • Politics
  • Opinion
  • Business
  • Sport
  • Entertainment
  • Film
  • Food
  • Lifestyle
  • Property
  • Travel
  • Tech/Auto
No Result
View All Result
The London Economic
No Result
View All Result
Home Opinion

Making the poor more well off would benefit everyone, so why aren’t we doing it?

Last week new figures were released confirming what many of us had suspected for some time. While the incomes of the richest households grew by 4.7 per cent those in the poorest strata of society saw their incomes fall by 1.6 per cent on average, proving beyond doubt that the rich are indeed getting richer […]

Jack Peat by Jack Peat
March 3, 2019
in Opinion

Last week new figures were released confirming what many of us had suspected for some time.

While the incomes of the richest households grew by 4.7 per cent those in the poorest strata of society saw their incomes fall by 1.6 per cent on average, proving beyond doubt that the rich are indeed getting richer while the poor become poorer.

But what few people realise is that inequality benefits few people in the grand scheme of things, and there is a good economic incentive to make the poor better off that would benefit everyone.

In 2015 the International Monetary Fund backed research that proved conclusively that inequality creates a drag on economic growth. Supporting analysis by the Keynesian economist and Nobel prizewinner Joseph Stiglitz it warned that countries with high levels of inequality suffered lower growth than nations that distributed incomes more evenly.

RelatedPosts

Elevenses: What Is Our Agenda?

Elevenses: Fears for Beers

Government’s race report failed to include the lived experiences of people of colour

Elevenses: My G-g-g-generation

It also proved that efforts to redistribute incomes had a neutral effect on GDP growth, which came as a blow to the many right wing politicians who argue that overcoming inequality robs the rich of incentives to invest and the poor of incentives to work, but that’s a debate for another time.

The key here was that the IMF managed to not only debunk the old myth that redistribution is bad for growth but also demolish the case for austerity – which has been shown to hit the poor the hardest – and they’re not alone in doing so.

Research from the Brookings Institution and the Reserve Bank of Australia found that giving poor people access to more money is key to the circulation of money in an economy. The institutions concluded that marginal propensity to consume for high-income earners is substantially less than for low-income earners, demonstrating that poorer people are likely to spend the bulk of any extra income while the wealthy are more likely to save it.

Last year, Portugal became a case study for this new way of thinking. By reversing cuts to wages, pensions, social security and offering incentives to businesses they showed that you don’t have to tighten your belt to survive during times of economic turbulence. Rather, if you create a virtuous cycle that puts the economy back on a path to growth then people will show a renewed willingness to spend which will benefit everyone.

Which begs the question, why isn’t everyone following their lead?

It’s easy to speculate possible reasons, but one argument is that the most powerful in society often enjoy a cosy relationship with the most well off, who are more likely to perpetuate outmoded arguments for austere policies. The UN’s Special Rapporteur on extreme poverty and human rights, Philip Alston recently concluded that the motivation to make cuts to welfare and social services is undeniably an ideological one, which goes some way in evidencing the aforementioned assertion.

But I prefer the environmentalist’s explanation.

As they have it, only “when the last tree is cut down, the last fish eaten, and the last stream poisoned, will we realise that you cannot eat money”.

Perhaps when the last person has run out of money we will realise the same thing.

Since you are here

Since you are here, we wanted to ask for your help.

Journalism in Britain is under threat. The government is becoming increasingly authoritarian and our media is run by a handful of billionaires, most of whom reside overseas and all of them have strong political allegiances and financial motivations.

Our mission is to hold the powerful to account. It is vital that free media is allowed to exist to expose hypocrisy, corruption, wrongdoing and abuse of power. But we can't do it without you.

If you can afford to contribute a small donation to the site it will help us to continue our work in the best interests of the public. We only ask you to donate what you can afford, with an option to cancel your subscription at any point.

To donate or subscribe to The London Economic, click here.

The TLE shop is also now open, with all profits going to supporting our work.

The shop can be found here.

You can also SUBSCRIBE TO OUR NEWSLETTER .

Tags: headline
Support fearless, free, investigative journalism Support fearless, free, investigative journalism Support fearless, free, investigative journalism

Subscribe to our Newsletter

View our  Privacy Policy and Terms & Conditions

Trending fromTLE

  • All
  • trending

What If We Got Rid Of Prisons?

Stress, fear and homelessness: The threat looming over families confronted with eviction

File photo dated 07/11/03 of a prison cell.

The Other Prison Pandemic

Latest from TLE

Falling apart: How the Conservative and ‘Unionist’ Party accelerated the UK’s decline

Ex-police officer charged with fatal shooting of Daunte Wright

Only 3 per cent of world’s ecosystems still intact, research finds

Royals won’t wear military uniform at Philip’s funeral to save Harry’s blushes

About Us

TheLondonEconomic.com – Open, accessible and accountable news, sport, culture and lifestyle.

Read more

Address

The London Economic Newspaper Limited t/a TLE
Company number 09221879
International House,
24 Holborn Viaduct,
London EC1A 2BN,
United Kingdom

Contact

Editorial enquiries, please contact: jack@thelondoneconomic.com

Commercial enquiries, please contact: advertise@thelondoneconomic.com

SUPPORT

We do not charge or put articles behind a paywall. If you can, please show your appreciation for our free content by donating whatever you think is fair to help keep TLE growing and support real, independent, investigative journalism.

DONATE & SUPPORT

© 2019 thelondoneconomic.com - TLE, International House, 24 Holborn Viaduct, London EC1A 2BN. All Rights Reserved.




No Result
View All Result
  • Home
  • News
  • Politics
  • Opinion
  • Business
  • Sport
  • Entertainment
  • Film
  • Lifestyle
  • Food
  • Property
  • Travel
  • Tech & Auto
  • About The London Economic
  • Meet the Team
  • Privacy policy

© 2019 thelondoneconomic.com - TLE, International House, 24 Holborn Viaduct, London EC1A 2BN. All Rights Reserved.