Unjust Rewards – An Exploration of the extent of inequality in Modern Britain that looks at the contrasting lives of the rich and the poor is yet another book I should’ve read when I bought it over 2 years ago! Still it serves as an interesting basis for researching the differences between the rich and the poor, and their values and attitudes towards their situation.
Chapter one outlines some well touted stats on inequality in contemporary Britain – I won’t go into details, but one thing that stood out (actually from chapter 2) Looking at executive pay – between 2000 – 2007 average earnings in the UK grew by 30%, while chief executive pay among the FTSE 100 companies rose by 150%; in the United States, by 2007, the average chief executive was earning 600 times the average manual worker, I will update these at some point!
Chapter two, based around interviews with those in the top 0.1% of earners who work for city law and finance firms and earn between 500 000 and 1 million, outlines what the wealthy know about wages in modern Britain and how they justify their own worth. NB – Toynbee found it difficult to gain access to this group – and they would only speak on the basis of anonymity.
These people, who have massive economic power and speak with authority on economic issues, have no idea about average incomes in the UK – firstly, they tend to underestimate just how wealthy they are – putting themselves closer to the average than they actually are – they thought that you would have to earn 162 000 to get into the top ten percent of earners, and that the poverty line stood at 22 000 – in reality the official figures stand at 40 000 and 11 000 respectively . They then offered the following justifications for their huge earnings –
- They are the economic benefactors of the country
- They are paid so much because they are competing with a global elite, so are top of the game globally rather than just nationally
- If they weren’t paid so much they would take their huge talents elsewhere
- They have worked hard for it – citing examples of pulling heroic all nighters to finish off contracts
- On taxation – they believed they shouldn’t be taxed more because government can’t be trusted to spend money efficiently, and that their cash shouldn’t go to those on benefits because they are essentially feckless – basically citing the daily mail line.
- They also believe they need their money to maintain a lifestyle equivalent to that of other people they mix with. This of course is a result of wealth and status inequality, Danny Dorling’s Injustice is good on this.
Of course, in reality, the above are myths – these people are not competing globally – most of them are British born, and have networked their way into their jobs via elite schools and universities – they are not interested in competition – they and their firms make their money by creating an image that they are the best at what they do and then selling their services for a huge profit, and they maintain their wages by blocking the majority of people from competing for their positions.
Chapter three investigates why Britain’s chief executives get paid so much money – basically those at the top are not especially talented people – and there is no correlation between company performance and executive pay – for every Alan Sugar there are dozens of bureaucratic pen pushers who just go with the flow. Worryingly old boy’s networks restrict access to the boards of the FTSE 100 companies – how else could it be that, in the age of globalization, 85% of CEOs of the FTSE 100 companies are British? Also, If there was true competition for these jobs the field would be much more international, and if there was genuine competition for these jobs, wages and bonuses would be driven down! Instead CEOs get paid as much as they do because they demand it – and they base their demands on what other CEOs are demanding – and their demands for ever increasing wages get pushed through at board meetings because of recommendations by consultants who make their recommendations for wage and bonus increases by looking at other CEOs salaries. Toynbee doesn’t analyse where the wage increases started from, which is an omission.
Chapter three… ‘the discrete anxieties of the Bourgeoisie’ doesn’t hold together that well – it starts off by outlining how wealth differences within the top 0.1% of earners make those at the bottom of these 30 000 or so individuals feel relatively deprived compared to those at the top – the super rich – and it is these super rich who have pushed up property prices in London by being able to pay millions of pounds for the most exclusive properties. This sense of relative deprivation then filters down to ‘middle England’ who compare themselves to the richest 0.1% and some of whom may really struggle to have what they regard as a good quality of life (holidays etc.) on their 40 000 wage packets – especially if they live in the south east and if this is per household and they have family to support.
The next section of chapter three outlines a piece of research by the Fabian Society in which middle income earners were interviewed about the attitudes to taxation and poverty – initially they didn’t think anyone was really poor, but that those at the bottom were poor because of their own fecklessness – again, classic daily mail stuff – but once they were informed about the real situation, their attitudes softened and the groups agreed that an increase in income tax of 2 pence in the pound would be worth it to alleviate this poverty.
The next sections of the book look at the lives of the poor, and then policies that might help resolve inequality in modern Britain – will be forthcoming!