That 1 per cent. In the past two years the top 1 per cent of income earners and their perceived privileges have become the focus of widespread social movements internationally. The Occupy movement in its various forms and the Indignados, on the streets, while in the seminar rooms the writings of French economist,Thomas Piketty, gave the spark to a new intellectual ferment over inequality that has passed into the political arena. It is the issue which will dominate the next US election and is playing strongly in the British campaign. A new report has now brought plenty of ammunition to those who would make it an issue in Ireland.
It is as if the left internationally has rediscovered its voice. Pikettty, who showed with a mass of evidence that growing inequality is a corollary of the market, has moved the argument on from one about unfairness and moral outrage, too easily dismissed as the “politics of envy”. It is now about inequality as one of the market’s central impediments to growth, what Marxists call a contradiction of capitalism. More equal societies, it is argued, perform better economically, are more stable, have less crime, power is less likely to be concentrated in fewer hands, and they are more likely to better protect their vulnerable.
“Income inequality leads to poverty and social exclusion but it also lowers demand in the economy in a downward spiral of lost spending,” writes Nat O’Connor , director of the Tasc think tank, of its report “Cherishing All Equally – Economic Inequality in Ireland.” Its concerns echo those of G20 finance ministers who at their recent Istanbul meeting warned for the first time of fears that the gap between rich and poor has widened following 2008’s financial crisis and may threaten economic and political stability.
Like Piketty's findings about the US, Britain and France, Tasc shows that from the 1980s – the Thatcher-Reagan years – the income share of the Irish top 1 per cent, those on €200,000 a year-plus, has more than doubled while their gross incomes increased fivefold. In the same period average gross incomes for the population only doubled. The top 1 per cent earn 9 per cent of all income, on average €373,000 per tax case.
Mouthwatering levels of pay for a minority are reflected in a grim reality at the bottom. Ireland’s median gross income for all those at work is currently €28,500 a year – half of all wage earners take home less, while two thirds, less than €35,000 (close to the average wage).
While social transfers and taxes contribute significantly to restoring Ireland’s net pay inequailty to average EU levels, Tasc argues, the State’s overall tax rate of 30 per cent is one of Europe’s lowest. The result is “weak public social services, most visible in the lack of childcare and preschool education , as well as weaknesses in the health system.” Political choices we have made.