From rage to riches: how fixing wealth inequality defeats populism

Mike Savage, Emeritus Professor of Sociology at LSE, introduces the International Inequalities Institute, highlighting its founding nine years ago to address the systemic challenge of inequality. He emphasizes how inequality has intensified, shaping public and private lives. The event focuses on how wealth inequality drives political engagement, with a specific focus on the UK. Savage then introduces the distinguished panel: Liam Byrne MP, Faiza Shaheen, and Professor Jonathan Hopkin, noting their extensive work and publications on inequality.

Liam Byrne discusses wealth, power, and the future, starting with Adam Smith's 'Wealth of the Nations'. He highlights that the nation's wealth has multiplied a hundredfold since 1970, with the top 1% seeing an 'extraordinary boom' during austerity, acquiring an additional trillion pounds. Conversely, real wages have declined, and social mobility has collapsed, taking five generations for those in the lowest income brackets to reach average wages. Byrne argues that this inequality fuels populism, detailing research correlating slower wealth growth with higher populist votes in the UK, US, France, and Scandinavia. He proposes a 'Universal Basic Capital' and advocates for tax system fairness, citing Chancellor Rishi Sunak's low tax rate on investment income as an example of systemic issues fostering inequality, which he believes endangers the future of the country.

Faiza Shaheen discusses how the language of wealth inequality is used across the political spectrum, worrying her due to its conversion into regressive political outcomes. She shares observations from her work with governments globally, where right-wing parties effectively leverage divisions (e.g., gender, immigration) to gain power, even when progressive policies have improved material well-being. Shaheen highlights how both the right and left use similar language to critique 'elites' and 'rigged economies,' but their proposed solutions diverge significantly. She notes the right's effective use of conspiracy framing regarding powerful corporations like BlackRock and expresses concern about the left's current lack of a unified narrative. For solutions, Shaheen suggests 'solidarity taxes' with clear goals, promoting emotional stories for tax initiatives, and empowering individuals through collective action, referencing her own successful independent campaign against established parties.

Professor Jonathan Hopkin offers an academic perspective on wealth inequality, noting how total wealth in Western countries has surged despite economic stagnation, benefiting the very wealthy. He references Thomas Piketty's argument that capital accumulates irrespective of economic growth, leading to an increasing share of wealth for investors. While acknowledging severe wealth inequality, Hopkin expresses skepticism about taxing the very wealthy due to their political influence and capital mobility. He points out that a significant portion of wealth is held by 'normal people,' complicating redistributive efforts. Hopkin emphasizes that much of the UK's booming wealth is debt-fueled, particularly in housing, and advocates for government investment in public goods like housing and transport infrastructure to stimulate equitable growth and reduce individual reliance on wealth for security, rather than individual wealth accumulation, noting that welfare states offer crucial self-insurance against life's uncertainties.

The panel addresses questions from the audience. A teacher asks about historical precedents for declining wealth inequality and if populism is merely a symptom. Liam Byrne points to mass warfare or revolution as historical drivers of wealth redistribution, positing the current challenge as finding a non-violent 'reformation'. He highlights that central bank quantitative easing largely benefited asset owners, creating a system where the wealthy pay lower tax rates. Another attendee questions whether taxation alone can address inequality amidst corporate monopolies and offshore ownership. Byrne agrees with the need for stronger anti-rent-seeking measures through industrial policy and competition reform, advocating for radical devolution of economic power. A local government worker raises concerns about focusing solely on constituencies voting for Reform UK, arguing this overlooks non-voters and migrants, and asks about the impact of declining 'third spaces'. Byrne acknowledges the importance of local agency and the political statement of not voting, and discusses how physical spaces for interaction foster community over tribalism.

A student asks what ordinary people can do. Faiza Shaheen suggests active participation in local campaigns, talking about politics, and engaging in boycott movements against unethical corporations. She underscores the need for stronger government regulation of large companies. Jonathan Hopkin critiques the over-reliance on the private sector for public services, noting its inefficiency and the government's compromised position. He argues that the British private sector's lack of investment necessitates greater government control and direct investment, citing examples where public entities performed better than private ones. Liam Byrne addresses the 'asset price inflation' driving current wealth, explaining how assets have become vastly more expensive relative to wages. He contends that relying solely on building more housing won't resolve the affordability crisis and that a fundamental shift is needed to prevent younger generations from growing poorer. He calls for a tougher competition regime, especially against foreign-subsidized companies, and stresses the need to rebuild social solidarity through collective action, sparking a 'new politics for a new time' to counter the tribalistic nature of modern populism.