Why should the people who work hard pay for everything?
This country spends more on welfare than at any point in human history: all of it is paid for, not by ‘the State’, but by taking money from the hardworking majority. Yet the more we give, the more is demanded; the more working people succeed, the more the
RYANAIR’S flight cancellation crisis is indirectly due to an even more bizarre phenomenon on the far side of the world: a new Chinese middle-class that has, in sociological terms, emerged out of nowhere.
And like most people who strike it rich all of a sudden, these 200million Chinese want to see the world. Their relatively new-found taste for flying means there are not enough pilots to go around – hence Ryanair’s rostering problem.
One of the favourite destinations of these selfie-taking jetsetters is Moscow, to see the tomb of Lenin, the man who had such a profound influence on their lives.
The number of Chinese visiting Russia doubled to 1.3million last year, and the Russians have literally laid out the red carpet, setting up a welcoming body which installs signs in Chinese in airports and museums.
Ironically, none of this would be happening if the Chinese hadn’t abandoned their Marxist-Leninist principles to inject a bit of capitalism into what had been a moribund economy. A nation that had lived in the direst poverty with 500million people subsisting on around a dollar a day was transformed into one with the largest middle class in the world.
INCOMES soared 20-fold and now more than 200million Chinese have assets averaging around $129,000 (€108,000) each – an unprecedented turnaround over a couple of decades.
These are the expanding rather than squeezed middle with a collective wealth worth $28.3trillion, more than their counterparts in the US, Japan or anywhere else in the world.
Yet China, because 1% of its people have become rich or even mega-rich at the same time as the emergence of its middle class, has gone from being one of the most equal countries in the world to one of the most unequal.
So too have former communist countries such as Poland and former East Germany.
The phenomenon highlights how the issue of equality is not quite as simple as it seems.
As the Chinese and East Europeans discovered, there’s no point in everyone being equal if it means being equally impoverished.
Part of the problem is the use of the word equality. It’s a very loaded word. Of course everyone should be equal – it’s a basic tenet of democracy.
But should everyone earn the same amount regardless of work rate, risk-taking or enterprise?
Most economists would agree that some pay disparity is needed to encourage work and enterprise – while too much leads to social unrest. We need to hit the ‘sweet spot’ somewhere in between.
Karl Marx and James Connolly, for example, were great and humane men revolted by the poverty they saw in the 19th and early 20th centuries. But their views were forged in the brutal world of post-industrial revolution Britain.
What would they say to the emergence of social democracies – with a free market and a welfare state – which have seen massive strides in quality of life across much of the world?
In Marx’s era there were no unions, social welfare, healthcare or free education. In Connolly’s day the average weekly income was the equivalent of €100 in today’s money.
Today, the State provides almost all our needs and even those on social welfare earn nearly twice what the average worker got in 1916 in real terms.
The communism espoused by both men didn’t do that badly in economic terms. East German workers had a decent life. But West German lifestyles were much better.
Capitalism tempered by a democracy that imposed regulations, taxation and workers’ rights proved a much more dynamic system creating more wealth for everyone.
Ireland is a particularly successful example of social democracy where a free market is offset by a pretty intensive involvement of the State in most aspects of our lives.
Bernie Sanders, who was a candidate for the US Democratic presidential nomination, is a modern Marx (although a
central leftist by European standards) who sees that workers don’t need to own factories to control the means of production.
That ownership model is highly inefficient as we seen in socialist Venezuela where its State-run economy ran out of toilet paper among other embarrassing shortages. It’s far better for workers to control the means of production indirectly through regulation and taxation.
Here, more than two million people have a social welfare entitlement. While we facilitate capitalism, sometimes shamefully in the case of multinational tax avoidance, our State controls, regulates and funds almost everything we do.
We have among the highest social welfare rates in the world and among the most numerous and best-paid public sector. We redistribute €44billion in wealth every year through taxes that are spent on social welfare, health and education.
Yet Ireland repeatedly stands accused of being an unequal society.
We are ‘one of the most unequal societies in the EU’, an uncharacteristically shrill Irish Times headline cried out last month after leftwing think tank Tasc released Cherishing All Equally, its latest annual report on the issue.
It’s just one of hundreds of similar headlines, echoing the views of many commentators, politicians and left-leaning economists.
In a report entitled Poverty, Deprivation And Inequality, the leftwing think tank Social Justice Ireland claims that 750,000 people in Ireland live in poverty.
It wants to see major increases in social welfare payments to help alleviate this crisis. People Before Profit also wants social welfare rates to rise.
And PBP deputy Richard Boyd Barrett described as ‘shameful’ the Government’s decision not to enshrine a ‘right to housing’ in the Constitution as PBP propose.
ARE they right? Is Ireland that unequal? Should we spread our wealth around a bit more? And where do we draw the line on what we expect the State to provide for its citizens?
Deputy Boyd Barrett’s doomedto-fail Bill was political grandstanding that won’t get any new homes built.
The right to housing is an admirable concept but the Government is correct to hold off on any such move to examine possible consequences.
Would it mean people on the housing list suing the State? Will it stop landlords evicting troublesome tenants, leading to even more pulling out of the market? Where would that get us?
The Tasc report Cherishing All Equally isn’t quite as clear cut as the headline implies either.
Yes, on the basis of gross income, Ireland is the most unequal country in the European Union. There is a huge disparity between lowand high-paid workers.
However, in terms of disposable income, ie, money in our pocket, inequality has actually decreased to one of the lowest levels in the EU as our high taxes and welfare redistribute income more than any other developed country.
So perhaps we need to concentrate on increasing wages rather than taxes, which would hit hard pressed workers too.
The SJI report is also not as damning as it appears.
It used the apparently EU-wide system of calculating the poverty line as a percentage (60%) of the median wage, which seems more like a measure of income disparity than poverty. Would this measure work in a place like Denmark where average pay is €5,120? Is earning €3,000 a month the same as living in abject poverty?
The SJI poverty line in Ireland is €26,398 for a family with two children, which is not much to live on here, but by global standards it is not that low.
The SJI does highlight another important issue – a high number of people who are working yet still living in apparent poverty.
Ireland could always become a more equal society by introducing taxes that redistribute wealth.
Yet no major party wants any radical change to Ireland’s corporate tax regime to stop us facilitating the greatest wealth grab in history – global tax avoidance.
We hate extra levies especially those that redistribute wealth such as property and inheritance taxes. PBP recently opposed rises in property taxes. Far from increasing inheritance tax, most politicians want reductions.
Where do we draw the line about what the State does and does not provide? As a society, we have gone from being grateful and pleasantly surprised if the State gives us any assistance to being annoyed if it doesn’t look after our every need!
WE SPEND more on homeless people than most countries and are investing more in social housing. Our health service spending is among the highest anywhere. Our teachers are among the best paid. The problem is we’re not getting bang for our buck. While the willingness to spend is there, even from centre-right parties, unfortunately, the ability to manage isn’t.
Even with all this State money sloshing around, there are inequalities and unfairness in Irish society. But the most unfairly treated Irish are those who fall, unseen, through the cracks.
You’re all right if you’re in the social welfare net, with the exception of those in need of housing.
It’s the low-paid workers trying to pay their own way, who have childcare, housing and medical bills they cannot meet. It’s the couple who can’t buy a home as we have no affordable housing policy.
It’s the self-employed with no entitlement to social welfare when their business goes belly up.
Or the wife whose husband cuts off her money supply but she gets no State support as she’s still classified as sharing his income – or the husband who gets no dole as his wife earns €400 a week.
Meanwhile, bankrupt developers and bankers live like kings on wives’ incomes, which are treated separately for bankruptcy.
So there is inequality in Ireland – just not always where you expect to find it.