November 2015        

Inequality in Ireland: A tale of two cities

The 85 richest individuals in the world have as much wealth as the poorest 3½ billion. The world is grossly unequal, and is becoming more and more so.
     Inequality is not an unfortunate by-product of the system, or the result of poor policy choices, or even individual greed: inequality is a direct result of the capitalist mode of production and is fundamental to the process of re-creation of capital, which sees great wealth created by working people but held as the private property of capitalists and speculators.
     The Central Bank has recently acknowledged that households have suffered a significant loss of income and wealth but that this has not been spread evenly. Some have been hit harder than others—not news to any of us who have been living through this crisis daily for the last seven years. During the boom years too workers could see the growing inequality of those driving BMWs and going on skiing holidays and those hoping for the next building contract or seeing if they could afford to study in the evenings while working.
     This is a continuing tale of two cities and two classes in Ireland, not a new story.
     During the “Celtic Tiger” years we had, as one writer described it, a rising tide that failed to lift all boats. For example, the number of those at risk of poverty grew between 1994 and 2005 from 15½ to 18½ per cent, hitting almost 22 per cent of the population in 2001.
     The Central Bank report shows a clear link between income and the type of assets owned. The highest income group is likely to own non-residential property and other types of financial assets, such as shares. And the higher the income group the higher the value of all types of assets held.
     Essentially, those with the highest income also hold most assets and the most valuable assets, making them not only the highest earners but also the wealthiest more generally.
     For working people in the lowest four quantiles of income, the home accounts for about 75 per cent of their assets, but for the highest earners their home accounts for only about 30 per cent of their total assets.
     The highest-income quantiles are also more likely to have significant debts (from other property investments) compared with the lowest quantile, putting to bed the myth that we all partied during the “Celtic Tiger” era.
     The top 20 per cent of households in terms of wealth account for 50 per cent of gross income and more than 70 per cent of assets. The TASC report confirms this inequality when it shows that the top 10 per cent in income received 34 per cent of total income, up 27 per cent from the 1970s.
     As we approach the hundredth anniversary of the Proclamation of the Irish Republic and the beginning of the Irish Revolution, Ireland is becoming an even more unequal society.
     The TASC report is invaluable for the information it gives. It looks at inequality in a number of areas, including income, wealth, tax, and public services, and concludes that Ireland is not immune from the phenomenon of growing inequality. We have a highly unequal distribution of income from the market (e.g. wages, salaries, and profits), which is masked by social transfers and taxation. Net income inequality in Ireland is at about the average for EU countries, but gross market income inequality is the worst of all members of the OECD, which is hardly where we want to be.
     Finally, with regard to income, TASC identifies two-thirds of households surviving on less than €35,000 per year, while 200,000 households have more than €75,000.
     Ireland is unequal. It was unequal during the boom, it was unequal during the crisis, and it is unequal during this so-called recovery. This is not merely a matter of bad policies or corruption: it is a direct result of a class system and a class state.
     A change of government without a fundamental challenging of capitalism and the state will do little to redress this inequality.
■ Sources: “The Financial Position of Irish Households” (Central Bank of Ireland), “Cherishing All Equally” (TASC).

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