Income inequality

“ A comparison of this sum with the average working-class income of £94, brings home the extent of inequality in the distribution of the national income. While it indicates that any approximation towards equality of incomes would not bring affluence, at anyrate on the present scale of national productivity, it serves also to refute the frequent assertions that poverty is unavoidable because Great Britain is not rich enough to furnish a comfortable livelihood for everyone. ”

“ And any continued increase in the absolute amount of the product of industry taking the form of profits will be likely to lead to a considerable measure of inequality of wealth; unless the amount of accumulation and investment on the part of the wage earners is largely increased. ”

“ Now, here are two men of equal incomes—that of the one derived from the exertion of his labor, that of the other from the rent of land. Is it just that they should equally contribute to the expenses of the state? Evidently not. The income of the one represents wealth he creates and adds to the general wealth of the state; the income of the other represents merely wealth that he takes from the general stock, returning nothing.418 The right of the one to the enjoyment of his income rests on the warrant of nature, which returns wealth to labor ”

“ Thus, to relieve labor and capital from all taxation, direct and indirect, and to throw the burden upon rent, would be, as far as it went, to counteract this tendency to inequality, and, if it went so far as to take in taxation the whole of rent, the cause of inequality would be totally destroyed. Rent, instead of causing inequality, as now, would then promote equality. Labor and capital would then receive the whole produce, minus that portion taken by the state in the taxation of land values, which, being applied to public purposes, would be equally distributed in public benefits. ”

“ Does the manufacturer, the merchant, the landlord, owe his wealth of accumulated labor to his own activity and the industry of his ancestors? Is the want of capital, the poverty of the toiling proletarians solely due to their own and their fathers' fault? But if the present inequality of fortune is not solely due to the economically correct action of the property-holding class and the shiftlessness of the non-possessing class, to what other cause can it be attributed? ”

“ But the great cause of inequality remains, and is manifesting itself in the unequal distribution of wealth. The essence of slavery is that it takes from the laborer all he produces save enough to support an animal existence, and to this minimum the wages of free labor, under existing conditions, unmistakably tend. Whatever be the increase of productive power, rent steadily tends to swallow up the gain, and more than the gain. ”

“ It is not in the relations of capital and labour, it is not in the pressure of population against subsistence, that an explanation of the unequal development of our civilization is to be found. The great cause of inequality in the distribution of wealth is inequality in the ownership of land. ”

“ It has been further objected, that since the rich have the greatest means of saving, any privilege given to savings is an advantage bestowed on the rich at the expense of the poor. I answer, that it is bestowed on them only in proportion as they abdicate the personal use of their riches; in proportion as they divert their income from the supply of their own wants, to a productive investment, through which, instead of being consumed by themselves, it is distributed in wages among the poor. ”

“ I don't want to make too much of the matter of money-wages apart from the ghastly contrast between the rich and the poor which is the essence of our system; yet remember that poverty driven below a certain limit means degradation and slavery pure and simple. Now I have seen a statement made by one of the hopeful men of the rich middle class that the average yearly income of an English working man's household is one hundred pounds. I don't believe the figures because I am sure they are swollen by wages paid in times of inflation, and ignore the precarious position of most working men ”

“ In this case, as in all cases of permanent inequality between the wages of different employments, prices and values receive the impress of the inequality. Slave-grown will exchange for non-slave-grown commodities in a less ratio than that of the quantity of labour required for their production ”

“ However, even if the menace of population is avoided, even if the general level of production is raised, and if, besides, the distributive outcome laid down as a goal for the policy of wage settlement is attained, nevertheless, there would remain a considerable measure of inequality of wealth. ”

“ The scale of living of the -1.7 people deteriorates. That of the +1.7 people improves prima facie, but in the last analysis it does not improve so much as it seems to, or perhaps does not improve at all, for the reason that by the curtailment of the share of property and management in the national income there is a curtailment of savings and the production of capital goods, which in ultimate consequences is most adverse to the wage-earners themselves. ”

“ Since there are two modes in which the inequality, which is indeed the condition and constituent of riches, may be established—namely, by increase of possession on the one side, and by decrease of it on the other—we have to inquire, with respect to any given state of riches, precisely in what manner the correlative poverty was produced ”

“ So you must, but you must not draw it in a way to do gross and palpable injustice,—to exempt the comparatively affluent, and oppress the industrious poor. There is a vital distinction, which it would be well if the income tax recognised, between income, of any amount, derived from realised property and from professional exertions. By all means give the humble professional classes the benefit of this distinction. But to draw the line, not according to the quality of the income as derived from capital or labour, but from its absolute amount, is arbitrary, invidious, and unjust. ”

“ A wrong economic policy causes unemployment and poverty, and then some people have more such spells than others. The crucial point is to get rid of unemployment in the first place, not study its dynamics.
(2) “Despite substantial economic growth in the OECD area during recent decades, a significant portion of the population consists of individuals whose household income does not support living conditions considered adequate in their country of residence. Individuals living under such conditions are typically labelled as being in poverty, even if their physical subsistence needs can be met.” ”

“ It is true, especially in the United States, that the poor have become rich and the rich poor, but inequality of condition is about as marked as it was before the invention of labor-saving machinery, and though workingmen are better off in many ways, the accumulation of vast fortunes, acquired often in brutal disregard of humanity, marks the contrast of conditions perhaps more emphatically than it ever appeared before. ”

“ Outlook, chapter 2, “Making the most of the minimum: statutory minimum wages, employment and poverty”:
(1) “High marginal effective tax rates associated with the phase-out range of the benefit give rise to disincentives to increase earned income beyond a certain limit.” (p55) . This is the poverty trap - that however does not exist. When there are ample employment opportunities, people on benefit can be fined if they reject reasonable job offers. (Above minimum income, there also is the dynamic marginal rate.) ”

“ So far then was the doctrine of economists from involving any "iron or cruel" limit that they always drew from it the lesson that it was in the power of the labouring classes to elevate themselves by the pleasant, if somewhat paradoxical, expedient of first enlarging their scale of expenditure. "Pitch your standard of comfort high, and your income will look after itself," is scarcely an unfair description of the rule of prudent imprudence they inculcated on working people. ”

“ In the first place, the levying of the Poor's Rate as a burden exclusively laid on real property in England, that is, lands and houses, to the entire liberation of personal property or professional incomes, is a most monstrous inequality—indefensible on every principle of justice or expedience, and the long continuance of which can only be explained by the well known and proverbial supineness of that class of men, and their inability to rouse themselves to any combined or general effort, even for matters in which their own vital interests are concerned. ”

“ Population is indeed sparse, but the usually prevailing absence of freedom of the lower classes prevents wages claiming the full benefit of competition. [184-3] This last circumstance is especially important. [184-4] For a given amount of the national income and of rent, every depression of wages must obviously raise the rate of interest, and every enhancement of wages lower it. ”

“ But we must add a large number to the men receiving wages, who would not be returned by their employers; and the calculation of payments must be further diminished by the consideration that in many branches of industry, and in factory labour especially, a very large number of females are employed, as well as boys. But the fact of the general proportion of wages to profits is sufficiently striking to show that the inequality of the condition of the labourer and the employer is not so extravagantly great as we have been accustomed of late years to hear asserted. ”

“ Although the evidence upon this point is by no means conclusive, it seems probable that the income of the wage-earning classes as an aggregate is growing even more rapidly than that of the capitalist classes. ”

“ Not only by the wealth of the employer, but also by invention in manufactory, by the building of roads and railways, and by the opening of new markets, the national income may be greatly increased. But in our present social order the workingman derives no benefit from this increase. His status remains the same, and the entire increase in income falls to the share of the employers, capitalists and landlords. ”

“ How can poor families consume more than they earn? Many supplement their income through welfare, Food Stamps, unemployment benefits, Medicare, Medic­aid, school lunches, rent subsidies and other programs, all of which the statistics leave uncounted. And the poverty statis­tics ignore wealth, which can be more important than current income. Workers temporarily laid off don’t get paychecks but they often have savings to fall back on. Although many retirees earn low in­comes, their houses, cars and furnishings are paid for, and they’ve got nest eggs. ”

“ It is by such taxes, indeed, by which the poor are eased, and the burdens thrown on the rich, that it is possible to prevent the continual increase of inequality of fortune; the subjection of such a multitude of artisans and useless servants to the rich, the multiplication of idle persons in our cities, and the depopulation of the country-side.
It is important that the value of any commodity and the duties laid on it should be so proportioned that the avarice of individuals may not be too strongly tempted to fraud by the greatness of the possible profit. ”

“ With every further advance, the condition of the laboring class is modified, according as the natural decline in this relative amount of their wages is outweighed or counterbalanced, or neither outweighed nor counterbalanced, by the increase in the aggregate product; in other words, in the national income in general as compared with the number of workmen. ”

“ This fact does not force to the conclusion that industrial inequality as it exists to-day, the great disparity of incomes, correctly or justly reflects the degree of difference in men's qualities, either native or acquired. ”

“ For if wages are drawn, not from capital, but from the produce of labor, the current theories as to the relations of capital and labor are invalid, and all remedies, whether proposed by professors of political economy or workingmen, which look to the alleviation of poverty either by the increase of capital or the restriction of the number of laborers or the efficiency of their work, must be condemned. ”

“ This is, of course, an example of one only out of many ways in which inequality of possession may be established between different persons, giving rise to the Mercantile forms of Riches and Poverty. In the instance before us, one of the men might from the first have deliberately chosen to be idle, and to put his life in pawn for present ease; or he might have mismanaged his land, and been compelled to have recourse to his neighbour for food and help, pledging his future labour for it. ”

“ Chapter III Wages and capital The cause that produces poverty in the midst of advancing wealth is evidently the cause that exhibits itself in the tendency, everywhere recognized, of wages to a minimum. ”

“ Thus the error in the distribution of income connotes an error in the distribution of our population amongst useful and useless, noble and ignoble, industries. Too few of our population are engaged in the manufacture of houses, boots, textiles, and furnishings. Too many of our population are engaged either in the direct production of luxuries or in the production of useful articles to be exchanged for foreign luxuries. The great masses of our people are under-served; a small proportion of our people are over-served. ”