A new leader with little credibility asks famous economists to ‘advise’ him on economic policy. It’s an old trick. News that Jeremy Corbyn is seeking the counsel of Thomas Piketty and Joe Stiglitz is not surprising – both are in the business of selling books suggesting the world is becoming more unequal than ever, and that a crisis is looming. The problem is that this ain’t so - not in Britain, at any rate.
Piketty’s central thesis was brilliantly dismantled by Chris Giles, the FT’s economics editor, who won an award for his expose. But at least Piketty published data that could be scrutinised: Stiglitz seems to make his up on the spot. Here he is on Radio 4’s Start The Week, falsely claiming that
“Inequality has gotten much worse in the United Kingdom”.
It's not quite as simplistic as the left seems to think. For example, David Cameron cut the tax for the best-paid - and what happened? They now shoulder a greater share of the income tax burden then at any time in UK history. So yes, the 1pc have never earned more - but they've never paid more tax. The redistribution system is working - and, under the tax-cutting Tories, working better than ever. This helps explain why UK income inequality metrics do not go the way that Piketty and Stiglitz think they ought to. Now, I'm not denying that inequality is an issue – I made a Ch4 documentary about the subject last year (you can view it here). But not in the way that Corbyn and Piketty seems to think. The problem with
Of course, the data is almost certainly not comparable, but no one - especially not Piketty - has managed to find a set of figures that genuinely are. The below chart shows what is, in my opinion, the most pernicious form of inequality in Britain - the way that UK state schools give out the best education to the richest, and the worst to the poorest. When Labour starts to worry about this, they’ll be getting serious about solving genuine British problems. But don’t hold your breath. UPDATE Nassim Taleb, the 'Black Swan' writer, points out the flaws in the Gini index, which most left-wing politcians use to claim that the UK is one of the world's most unequal countries. The Gini index is, he says, simply unfit for international comparisons.
— NassimNicholasTaleb (@nntaleb) September 27, 2015