Sarah Carey looks at economic inequality

22/07/2009

Sarah Carey has been mentioned in dispatches on PE before but, leaving aside her slightly problematical historical analysis, today she’s on the right track when she notes that:

“[...] this relative equality was undone during the Tiger years. [....] Inequality made a comeback not because the poor got poorer, but because the rich got richer and the number of rich people increased enormously.”

This thesis is borne out by much of the data in TASC’s recent briefing document The Solidarity Factor, issued to coincide with the release of survey results showing that 85 per cent of respondents believe wealth is distributed unfairly in Ireland, while the same proportion – 85 per cent – believe that the Government should take active steps to reduce the gap between high and low earners.

However, one can certainly quibble with Ms. Carey’s conclusion that:

“Statistics will probably show that in the next three or four years Ireland will be a more equal society than it has been for the last 10. Not because the poor are catching up, but because the wealthy are falling back.”

Given the current attacks on the incomes of those at the bottom of Ireland’s money pyramid (ranging from the proposal in the An Bord Snip Nua Report that Social Welfare rates be cut, to Finance Minister Brian Lenihan’s statement at the McGill Summer School last night that “if the minimum wage becomes an obstacle to job creation the Government will have to look at it”), it seems unlikely that the gap between high and low earners (never mind the gap in terms of asset wealth)is going away any time soon.

Incidentally, with regard to the minimum wage it’s worth having a read again of Paul Sweeney’s very first post on this blog, back in February, when he looked at the whole issue of wages and competitiveness, as well as Terry McDonough’s post illustrating why wage cuts are not a good thing.

Posted in: InequalityWelfareLabour market

Tagged with: Wagesequalitysocial welfare

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Shana Cohen

Dr. Shana Cohen is the Director of TASC. She studied at Princeton University and at the …

Paul Sweeney

Paul Sweeney is former Chief Economist of the Irish Congress of Trade Unions. He was a …

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