Was Blair right? Miles and Simon have been debating this.

Blair said (pdf):

I don’t care if there are people who earn a lot of money. They’re not my concern. I do care about people who are without opportunity, disadvantaged and poor.”

He walked the talk. Tax credits, more generous pensions, fuller employment and the minimum wage helped reduce poverty whilst his government did little to restrain the rise in very top incomes. Miles approves of this. And he has a good point: poverty is a great evil.

This, though, misses something – the maths. If the rich are getting richer and the poor are getting better off, then for a given level of income, somebody must be getting worse off. The “Blairite society” of super-rich but little poverty is one in which the middle class is relatively poor.  

This has its drawbacks – especially perhaps from a conservative point of view. As Deirdre McCloskey has argued, a bourgeois society embodies virtues of prudence, justice and regard for others. A Blairite “winner take all” society jeopardizes these: why work hard at school and university (and incur massive debt) when it’ll only get you grunt-work and no hope of a decent home? And an insecure and embittered middle class also threatens political stability. Back in 2013 Fraser Nelson wrote:

Our middle classes — the great stabilising force in our society — are falling fast. It’s hard to imagine the British bourgeoisie taking to the streets, but someday soon they might turn around and say: ‘Sorry, but we’re really rather mad and we’re not going to take it any more.’

Perhaps Brexit. Ukip and the rise of insular, anti-market sentiment vindicates him: inequality can be bad for economic freedom.

Of course, my concerns would be irrelevant if the Blairite society were to lead to faster economic growth and hence a growing pie for all. But this hasn’t been the case. Quite the opposite. Since the mid-90s, growth in GDP per head has slowed.

And it might have done so because of the Blairite shift. Simon’s right to say that the super-rich engage in rent-seeking. But this isn’t confined to the likes of Arron Banks meddling in politics. It also happens in the workplace: rising CEO pay has come at the expense of shareholders and workers. And there are several reasons to suspect that a big take by the super-rich reduces economic growth. Not least of the mechanisms here is that it leads to worse politics by reducing trust.

Miles might be right that it’s better to have a society of super-rich and no poverty than one in which there’s poverty and no super-rich. But this is a close call. And it omits a third option – a society in which there is both no poverty and no super-rich. It is this that we should be striving for.

Another thing: Yes, I know the Gini coefficient has fallen in recent years. But this tells us little: the Blairite society might have a low Gini because there’s a low gap between the middle class and the poor even if the rich are very rich.