Tuesday, 14 May 2019
Concentrated wealth as a major drag on national prosperity
The concentration of wealth in the hands of the few is a drag on any economy. So said Adair Turner in his book, Debt. Such wealth is frequently saved in the form of nonproductive assets. In contrast, wealth more widely distributed is circulated within the economy to the benefit of most, if not quite, all.
Quite why I had seen this as a 21st century phenomenon, I don’t really know. It was the case in 19th century Britain, but many of those with wealth then invested it in industry which in turn created employment and, to a degree, distributed wealth.
In her masterly book, the Team of Rivals, Doris Kearny Goodwin tells of the Southern states of America before the abolition of slavery.
‘Slavery trapped a large portion of the Southern population, preventing upward mobility. Illiteracy rates were high, access to education difficult. While a small planter aristocracy grew rich from holdings in land and slaves, the static Southern economy did not support the creation of a sizeable middle class.’
In contrast of the Northern states, she sees a land ‘teaming with bustling, restless men and women who believed passionately in progress and equated it with growth and change; the air was filled with the excitement of intellectual ferment and with schemes of entrepreneurs.’
I can’t help seeing a parallel with 21st century Britain, where we are told that employment is at an all time high but so much is part time and low paid, and that wealth is again concentrated in the hands of the few and invested in such as empty London penthouse apartments. Employment for middle earners is shrinking. This is before we look at the wider world and the plight of refugees.
Schools in poorer areas, for all the efforts of teachers, are not enabling upward mobility. Our public schools, great educational establishments though they are, are overwhelmingly the preserve of the wealthy whose children go on to Oxbridge and well paid jobs.
Are we so different economically from pre-civil war USA?