Sunday , May 26 2019

The 1% vs the 0.1%

chris by
chris
My articles My books
Follow on:
Summary:
Many of you might react to the FT’s story about the “squeezed 1%” by getting out the world’s smallest violin. I think this is a mistake. It reminds us that the damage done by inequality extends beyond the general social and economic harm. It hurts even those who are a long way up the income ladder. First, some statistical context. Someone at the bottom of the top percentile of incomes is on about £120,000 a year. The top 0.1%, however, gets over £500,000. A very well-paid head-teacher, professor or NHS consultant might just get into the top 1%, but the top 0.1% comprises bankers, very successful entrepreneurs or bosses of big firms. As the IFS’s Paul Johnson says, “someone ‘only’ at the top 1% is much more like the average person than they are like someone at top 0.1%.” This gulf

Topics:
chris considers the following as important:

This could be interesting, too:

chris writes The Tories’ structural weakness

chris writes How inequality makes us poorer

chris writes Debating the far right

chris writes On media influence

Many of you might react to the FT’s story about the “squeezed 1%” by getting out the world’s smallest violin. I think this is a mistake. It reminds us that the damage done by inequality extends beyond the general social and economic harm. It hurts even those who are a long way up the income ladder.

First, some statistical context. Someone at the bottom of the top percentile of incomes is on about £120,000 a year. The top 0.1%, however, gets over £500,000. A very well-paid head-teacher, professor or NHS consultant might just get into the top 1%, but the top 0.1% comprises bankers, very successful entrepreneurs or bosses of big firms. As the IFS’s Paul Johnson says, “someone ‘only’ at the top 1% is much more like the average person than they are like someone at top 0.1%.”

This gulf between the 1% and 0.1% hurts the 1% in three ways. Miniature-violin

One is simply that they are aware of it. For the poor, the rich are out of sight, out of mind: in fact, they grossly under-estimate just how much the rich make. The 1%, however, see it more clearly. We compare ourselves to people like us. And the 1% benchmark themselves against the 0.1%. They are often university contemporaries, so one might resent why the no-mark who was no smarter than him is earning five times as much. Or they might compare social utilities. A doctor covered in blood will wonder why he is paid so much less for saving somebody’s life than a banker is paid for – well, what? And of course the 1% sees the 0.1% close up. Just as no man is a hero to his valet, so nobody in the 0.1% is a hero to his underling. Middle-managers have a lively awareness of the short-comings of senior managers, as professors do of the foibles of vice-chancellors.

All this naturally breeds resentment. Experiments (pdf) by Philip Grossman and Mana Komai have confirmed this. They split subjects into rich and poor groups and gave everybody the option of destroying another’s wealth. They found that predations by the poor upon the rich were only a minority of attacks. Instead they found that the rich attacked other rich. This is consistent with reference group theory: we compare ourselves to those like us:

We find strong evidence of within class envy: the rich targeting the rich and the poor targeting the poor. Within the rich community, the target of envy is usually a wealthier subject whose wealth is close to that of the attacker; the attacker may possibly be trying to improve his/her relative ranking.

A second effect of the gap between the 0.1% and 1% is the subject of the FT’s article. The very rich price the reasonably rich out of houses and schools: top private school fees have soared in recent years because they market themselves to the global rich. As Rick wrote:

The painful fact for many people is that their jobs no longer pay enough for them to enjoy what they had been brought up to think of as a middle-class lifestyle. They can’t afford to live in the sort of house in the sort of street where they grew up. They can’t afford to send their children to the schools they went to. And those nice leafy hospitals their parents used to go to, forget it. The super-rich can still afford these things, though, so the prices keep going up, well beyond the reach of the old middle-classes.

The difference between the 1% and the 0.1% doesn’t, however, lie merely in what they can afford. There is perhaps an even bigger difference. A man (it’s usually a man) on £500,000 can reasonably look forward to quitting work or downshifting unless he has arranged his affairs especially badly. Somebody on a low six-figure salary, however, cannot. Instead, they often face years of stress – exacerbated by managerialism’s deprofessionalization of erstwhile professional jobs and to the fact that their inability to afford homes in central London condemns them to long and stressful commutes.

You will of course object here that this is also true for millions of workers far outside the 1%. You’d be bang right. And that’s the point. Class is not merely another yet another identity. It is an objective fact about your relationship to the means of production – about whether this puts you in a position (pdf) of subordination or domination. In many cases – not all but many – even those on six-figure salaries are in subordinate and stressful positions. They are objectively working class, however posh they might fancy themselves to be.

Which is why we need class politics. Whereas identity politics risks splitting us into mutually hostile ghettos, proper class politics has the potential to unite us – well most of us. One of the great marvels of capitalism is that we are so incapable of seeing this.

About chris
chris

Biography data hidden due GDPR Data Protection. Author consent pending.
(Economic Blogs is not responsible for linked external content)

Leave a Reply

Your email address will not be published. Required fields are marked *