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Don't believe the inequality hype
Richard Delevan



THE rich get richer and the poor get poorer. Something we all know to be true. The same way we used to know that the sun revolves around the earth, or that the world is flat.

Certainly that was the drumbeat coming from some quarters in the run-up to the general election. Celtic Tiger prosperity had enriched those at the top but had done little to improve the lives of the poor.

Fintan O'Toole kicked off the campaign with a bit of wishful thinking on 30 April in The Irish Times, hoping for a campaign that would focus on "a fairer society."

"The long economic boom has turned Ireland into one of the wealthiest countries in the world, but it has done little to affect the structural inequalities in society."

Last year Vincent Browne, for whom the idea of Ireland as an unequal society is a self-evident truth, reflected on how Garret FitzGerald had let him (sorry, the poor) down by leaving behind "a hugely unequal society."

Labour in government, he wrote, "oversaw the emergence of the new inequality."

Browne pointed to a Bank of Ireland study revealing that Ireland has 30,000 millionaires excluding the value of primary residences, contrasted with the great (well, 20%) unwashed who get by on 30,000 . . . "incomes that many on the wealthier side of the fence would consider risible."

O'Toole, to be fair, pointed to slightly more robust data to make his point . . . that in the UN Human Poverty index, Ireland was second from the bottom of a league table. Granted, it was a league table of the 18 wealthiest economies on the planet, but nonetheless a fair point.

But the underlying assumption that underpins these critiques of modern Ireland . . . both the liberal and would-be radical versions . . .

is that inequality has increased over the course of Ireland's economic boom.

This assumption feels good in a headline but doesn't track with the everyday experiences of many people . . . particularly of Breakfast Roll Man, for example . . . and is why that critique of Fianna Fail-led Ireland didn't get traction.

Even with expectations unimaginably greater than in 1994, people feel that the system needed tweaking, not wholesale change.

And as we keep relearning, sometimes the crowd is wiser than our "opinion former" class. As it turns out, the judgement of the people in rejecting this critique was borne out last week. In its annual Employment Outlook Study, weighing in at 281 pages, the OECD worried publicly about growing income inequality and the reduction of the share of national income that goes to labour (and not capital) in the US, Japan and Europe.

There is much in it to add to the chorus of worries for the future. The OECD sees evidence that employers in rich countries are bullying employees by using the threat of offshoring . . . moving jobs to lowwage countries like India and China . . . as "a bargaining chip" in pay talks. Absolutely terrible . . . and what a great fillip to the narrative that in Ireland, the rich have gotten richer while the poor have gotten poorer.

After all, in the US, the people at the top . . . the 90th percentile of earners . . . now have an income nearly five times as much as those at the other end . . . the 10th percentile of earners. The ratio measuring the income gap grew from 4.51 to 4.86 between 1995 and 2005.

Similar upswings were measured in South Korea, Canada, the UK, the Netherlands, Germany, Australia, France, and even Sweden and Norway have greater earnings inequality.

But there were a couple of outliers. In Ireland in 1995, according to the OECD, the ratio between the top and bottom earners was 4.01. In 2005, the ratio had decreased, to 3.57. So that means over the course of Ireland's economic boom, the income gap between rich and poor got smaller.

One can argue that that's not good enough. The gap is greater in Ireland than it is on the continent. But what one can't argue in the face of this evidence is that Ireland's economic boom increased income inequality. The world might once again be flat . . . but people who want to say Ireland is an unfair society have to shelve the 'poor got poorer' trope for the moment.




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