Addressing the Wealth Gap in the UK and Japan

‘Addressing the Wealth Gap in the UK and Japan’, was the sixth in this year’s seminar series, ‘Economic Futures: Wealth and Well-Being in the UK and Japan’.

Summary

James Bartholomew, the Chair and the Earhart Foundation Senior Fellow in Social Policy at the Institute of Economic Affairs, introduced the evening’s topic by questioning our concern with the wealth gap, suggesting that a society with levels of inequality is preferable to a communist state. He also wondered how levels of inequality had changed over time and highlighted Japan as an interesting case as, offering a limited welfare system, it is, nevertheless, considered a more egalitarian society than most.

 

Danny Dorling, Professor of Human Geography at the University of Sheffield and an Academician of the Academy of the Learned Societies in the Social Sciences, began by correlating increasing levels of wealth with increasing life expectancy and introduced the extreme case of Westminster where life expectancy is rising by a year annually. Dorling also touched on the paradox illustrated a couple of decades ago by East Anglia and Okinawa – both regions boasting long life expectancy despite low income levels.

 

Dorling pointed out that whereas inequalities in health between social groups in the UK have stopped rising (perhaps a result of anti-smoking campaigns), health inequality between geographical areas is increasing as a result of slight improvements in poor areas and great improvements in affluent areas.

 

In 2009, with nine colleagues from three universities, Dorling looked at long-term geographical patterns of poverty and wealth and, incorporating other people’s research, came up with five measures: core poor, breadline poor, the asset wealthy, the exclusive wealthy (5% of population) and those neither wealthy nor poor.

 

Ways of measuring levels of wealth change over time, Dorling explained, as once luxurious items become the norm, for instance. In Dorling’s assessment, the breadline poor, constituting 25% of the population, are those unable to save £10 a month or to go on holiday (excluding a visit to one’s parents) and the percentage of those neither rich nor poor has shrunk to 50% – particularly so in London.

 

In terms of geographical inequality, Dorling spoke of the mass disparity in wealth between the north and south and referred to the over-emphasis on London. He went on to question its future geographical advantage by saying that while coffee houses may have opened in London first they have now spread; that Heathrow is no longer an unrivalled transport hub and English is spoken all over the world now, and is not a prerogative of London.

 

Though Dorling seemed to agree with Professor Reiner of the London School of Economics and Political Science in his perception of an increase in general selfishness (epitomised by contestants on The Apprentice) and anti-social behaviour in the UK – in concluding, he listed several reasons for optimism and pride in what has been achieved in terms of narrowing the inequality gap. These successes include equality before law, the abolition of slavery, the attainment of universal suffrage, the outlawing of discrimination, the legal right of education for every child, and the attainment of basic incomes for 50% of the population.

 

The second presentation was by Dr Tomoki Nakaya, Associate Professor of Geography at Ritsumeikan University, who began by examining the notion of Japan as an egalitarian society. Going back in time, Nakaya said that in 1960, 15% of the population considered themselves lower-class whereas today that percentage is 5%; the majority in Japan considering themselves as being average or somewhere in the middle. There is also a diminishing trend of regional disparity of wealth and life expectancy in Japan (though there is a higher mortality risk for the unemployed), boosting the impression of Japan being an egalitarian society.

 

Recently, however, this idea has been contested and there has been an increase in academic output on issues of ‘inequality’ in Japan. Unemployment was virtually non-existent in Japan prior to 1990 but during the recession beginning in the 1990s, it rose to 5%.

 

Another indicator of increasing inequality in Japan is that some households are in need of social support largely a result of the ageing population compounded by the falling birth rate. The number of workers on temporary or unfixed contracts (as main breadwinners rather than as supplementary breadwinners) has also risen.

 

Nakaya concluded by saying that inequality of wealth is less in Japan than in the UK but is, nevertheless, widening steadily, characterised by an increase in the number of poor (augmented by the ageing population and falling birth-rate): the income poor in Japan comprising 10% in 2000 is increasing while the extremely rich is decreasing from a high of 0.27% in 1989 to 0.15% in 2004.

 

Japan will have to consider countermeasures, by reviewing labour and social policies; assessing what a fair distribution of wealth entails and whether, for instance, Japan will follow the UK in the trend of widening inequality.

 

The wide-ranging and impassioned questions following the presentations conveyed the audience’s interest in the topics raised and included questions about the basis of Japan’s more egalitarian society; the impact of tax rates on incomes levels; the roles of not for profit organisations; the impact of family disintegration on widening inequality; the ideal ratio of rich to poor; the correlation between a widening wealth gap and rise in crime or antisocial behaviour; the inevitability of inequality in major cities and the relationship between wealth and well-being among others.

 

James Bartholomew thanked the speakers for their interesting presentations and in giving a vote of thanks, Professor David Cope, Director of the Parliamentary Office of Science and Technology, reflected on the quality of the contributions made and volume of information provided, also thanking the Chair for his valuable contributions.

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