The great myth of UK inequality

The great myth of UK inequality

by Murdo Fraser
article from Saturday 14, December, 2013

IT HAS BECOME something of a statement of faith for the “Yes campaign” to break up Britain that the UK is one of the most unequal countries in the world. This is a claim often repeated by Yes campaigners in the media. One can hardly watch a TV debate on independence without someone, either from the panel or the audience, referring to this supposed “fact”.

The Yes Scotland website states “the UK is the fourth most unequal country in the developed world”. This claim was repeated in the parliamentary chamber as recently as Wednesday of this week by SNP MSP Joan McAlpine, who stated “the United Kingdom is the fourth most unequal country in the developed world”.

The SNP White Paper on independence, “Scotland’s Future”, states something slightly different: “The UK ranks 28th out of 34 nations in the OECD on a measure of overall equality”. (p.44). This is reiterated at various points, for example p. 135 “the UK is already one of the developed world’s most unequal societies”.

This supposed inequality in UK society is held up as a primary reason for separation of Scotland from the UK although, interestingly, it is quite hard to find the argument as to why an independent Scotland would necessarily be any different.

How much validity is there in these (conflicting) claims? Are we the 4th most unequal country in the developed world, as Yes Scotland and sundry SNP MSPs would claim, or the 6th, as stated in the White Paper? Or is the reality something entirely different? I thought I should try and find out.

Inequality is measured by what is known as the “Gini coefficient”, drawn up by the United Nations, the World Bank, the US CIA, and the OECD. The Gini coefficient is a number between zero and one, where zero corresponds with perfect equality (where everyone has the same income) and one corresponds with perfect inequality (where one person has all the income – and everyone else has zero income). So the lower the GINI coefficient, the more equal the society.

For the purpose of the exercise, let us assume that equality of outcomes is what matters, and that greater equality is desirable. Many would argue, however, that what matters is equality of opportunity, but let us lay that aside for the moment. Let us also assume that the data collected on income and wealth, derived from household surveys, is comparable across countries, which may not necessarily be the case.

What the data tells us is that the Gini coefficient for the UK for income, after transfers and taxes are applied, is calculated at 0.345. By comparison, Denmark is 0.240, Sweden 0.250, Norway 0.258, Germany 0.283 and France 0.327. Across the world, this puts the UK rank in terms of inequality at 43 out of 156 countries, well within the top third of the most equal societies.

Ah, but, Nationalists will claim, the comparison is with the developed world, in other words the OECD countries (although this distinction is not always made by Yes campaigners). Here they appear to be closer to the truth. The UK ranks 28th out of 34 in terms of the Gini coefficient, the 6th most unequal, not the 4th. So even on this measurement Yes Scotland (and Joan McAlpine) are in error.

But this is not the full picture.

Income only represents part of the story. Perhaps more important is the distribution of wealth in society, and here the data tells us something quite different. In the recently-published Global Wealth Databook 2013 produced by Credit Suisse (published October 2013), the UK Gini coefficient for wealth distribution is assessed (in percentage terms) as 67.7. That puts the UK at 14 out of 34 OECD countries, comfortably in the upper half.

France (69.0), Germany (77.1) and Switzerland (80.6) are all below us (i.e. more unequal societies).

Still more interesting is the placing of Scandinavian countries. Finland is at 66.1 and Iceland 67.3, marginally more equal than the UK. But Norway (77.8), Sweden (80.3) and Denmark, the land of Borgen, (107.7) are all less equal than the UK.

This is such a remarkable finding it is worth highlighting. For years the Scandinavian countries have been held up by the SNP and their fellow travellers on the left as models of the socially-just and equal economies which an independent Scotland should aspire to emulate. But in terms of distribution of wealth, the data is clear: Norway, Sweden and Denmark are all less equal than the UK.

The consequence of this is that a vote for independence in order to leave the UK and be more like Scandinavia is a vote not, as nationalists would claim, for a more equal society, but for precisely the opposite. And it means that both Yes Scotland, and the SNP, are deliberately trying to mislead the public about the current political situation in the UK for their own partisan purposes.

Will Yes Scotland be changing their website? Will the SNP be amending their White Paper? If they had any integrity, they would be doing so now.

 

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