Inequality and the crisis: still pre-Occupied

http://www.guardian.co.uk/commentisfree/2012/oct/30/andy-haldane-occupy-bank-of-england

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Imagine one of Britain's most senior financial policymakers – a man sometimes tipped as a possible future governor of the Bank of England – speaking at a debate organised by Occupy protesters, famous for their excoriating criticism of contemporary capitalism. Now boldly entertain the idea that this regulator of banks might actually claim that Occupy is right. Well, speculate no longer, because this event leapt from fantasy to reality this week.

At an event organised by Occupy Economics, Andy Haldane, the Bank's executive director for financial stability, claimed the movement best known for last year's protest camps in the City and on Wall Street had helped start "a reformation of finance". More than that: he declared their arguments about the ever-growing gap between the top 1% and the rest of us to be "right": "At the heart of the global financial crisis, were and are problems of deep and rising inequality." Moreover, he acknowledged that, far from having closed during the biggest financial crash since 1929, the wealth gap continued to gape. "We have seen, first, inequality-induced crisis and, latterly, crisis-induced inequality."

Mr Haldane is one of the most interesting thinkers in financial economics, but on this point he is backed up by researchers at the IMF, rightwingers at the University of Chicago and many others. One of the world's leading scholars on economic inequality, Berkeley's Emmanuel Saez, published a paper this March on how Americans were faring in the recovery from the Great Recession. In 2010, the economist calculated, the 1% saw their incomes soar by 11.6%; the incomes of the other 99% grew only 0.2%. For the British translation of this story, look at the Resolution Foundation's report on living standards. It shows that take-home pay grew 2.7% a year for most of the postwar period; in the past decade it inched up only 0.6% a year. To emphasise the point that it is those at the very top who have captured the vast majority of the gains, the Resolution Foundation estimates that even those in the top 10% (as opposed to the now infamous 1%) have seen their incomes stagnate since 2001.

From all of this flows one observation and one question. The observation is a simple one: in meeting Occupy protesters, Mr Haldane has gone further than any frontbench politician. Ed Miliband and Vince Cable sympathise with the demonstrators – but their most serious allies have been Mr Haldane and Adair Turner (with his criticism of "socially useless" banking). In this crisis, the technocrats are braver than the MPs. But, understandably, they frame this problem as being about culture and regulation rather than lobbying and ideology. When will we realise that this grotesque, dangerous apparently economic problem demands a full-bore political solution?