Just how unequal is Britain?

The Sunday Times has a fascinating little article.

What it’s like to live in England’s richest and poorest neighbourhoods

On the ground in Clapham and Grimsby, where household incomes differ by nearly £90,000

Well, OK. Except this offers us the opportunity to think about how really unequal Britain is.

That average household income in Clapham is £108k. In the worst - sorry, poorest - ward of Grimsby it’s £22k. So, that difference is 5x. That’s a pretty big difference between poorest area and richest.

But they also give us post housing cost net incomes (which we assume is after income tax and NI). £54k and £17.7k. That’s a 3x difference.

So, what’s the income difference we should be using? Is Britain geographically unequal by 5x or 3x?

We can go further too for other prices vary by geography, not just housing. A pint (hey, journalism and booze, why not?) is apparently about £5 in London, £2.30 in Grimsby. Yes, we know, beer prices vary by geography rather more than most other prices except those of land and housing. But still, use that as our measure and geographical inequality falls from 3x to 1.5x.

This modern world takes economic inequality to be the besetting sin of modern society. We disagree but so what? We would though insist that the only economic inequality that can possibly matter is consumption inequality. And that’s very much lower than the standard numbers portray.

Don’t forget that everyone is taxed upon the national numbers. All benefits (other than housing) are paid according to the national numbers. The leverage of the tax and benefits system when applied across those variations in regional or more local income is huge. As above, we can argue that inequality declines from 5x to 1.5x. A pretty extreme argument, we agree, but it’s certainly to less than the 3x that just post tax and post housing numbers give us. For prices of many to all things do vary by geographic location.

So, what’s the correct level of inequality that we should be striving for? And what’s the number which, when reached, we say “That’ll do”?

As we’ve suggested before we think that the inequality numbers should be measured using local PPP calculations. That is, just as we compare incomes between countries by the local costs of a specific lifestyle in those different countries so we should do so over the geography of Britain.

The reason we don’t is obvious of course. Once we do that then much of the claimed geographic inequality we must strive to get rid of has already been got rid of. And those who would tax the bourgeoisie out of existence would never want to give up their grand excuse now, would they?