With inequality becoming even more widespread during the recession, Robert Nielsen examines the causes of inequality
Let’s play a game. What country is so riven with inequality that the top 5% have 40% of the country’s wealth? Is it some backward African country where a tiny elite controls the resources while the rest live in dire poverty? Is it a Latin American country where the rich live gilded lives in mansions while the poor are crowded into shantytowns?
Perhaps a post-Communist country whose collapse allowed an oligarchy to seize the country’s resources? Or does it belong to another time when landlords controlled the wealth while everyone who had the misfortune to be a peasant had to eke out a squalid survival? Believe it or not, but it was, in fact, our native Ireland in 2007.
The top 10% in Ireland have as great an income as the bottom half of society. When home ownership is excluded, the top 1% has control over 34% of the nation’s wealth. This is not a small gap of some people getting slightly ahead, this is a massive divide. When almost half of the country’s income is concentrated in such a small elite, this is unhealthy for Ireland socially, economically, and politically.
Most people think that such inequalities only exist in developing countries, not in countries like our own. Unfortunately, this is not the case. This inequality is not relic of the past; to the contrary, the rich have doubled their share of the national income since the ‘70s and ‘80s. There has always been a divide between rich and poor, but the inequality has grown enormously in the last 30 years.
There is a common saying that a rising tide lifts all boats. What does it matter how much wealth the rich have, so long as everyone is getting richer? Sure, didn’t we all party during the boom? While there was a significant increase in the share of wealth going to the rich, the poverty rate was more or less constant during the Celtic Tiger. The level of poverty actually increased between 1994 and 2001.
Ireland was doing fantastically, but its poor were left behind. In 2005, when we were all supposedly living the high life, without social transfers, 40% of the population would be in poverty, compared to only 18% who actually were. There was huge money being made in Ireland during the 2000s; the problem was that it was only a very small number of people who were making it.
Why have the gaps continued to grow when, in theory, we all have the same opportunities in a country with free education, free healthcare and social welfare to ensure that everyone has enough? Unfortunately, inequality touches on all aspects of our life including education.
It is commonly thought that how well you achieve in school is due to intelligence and hard work. There is, however, a third factor that plays just a big, if not bigger, role; that is the class and wealth of the parents of the student.
In their exhaustive examination of inequality, British researchers Richard Wilkinson and Kate Pickett found that the biggest influence on how well a student does at school is the social class they come from. Even when working-class children have identical IQ to middle-class children, they are still less likely to do as well.
Children whose parents are professionals are more than 3.5 times more likely to get 4 or more Cs on Higher Level Leaving Certificate papers than the children of the unemployed. Education is supposed to be the great leveller that gives everyone an equal opportunity, when the reality is that it is home to gaping inequalities that continue the divide the next generation.
The rise of private schools has only made the division worse. Middle-class parents can now afford to pay for top-quality private schools to give their children an advantage. Private grinds are available too, so that you can buy good grades.
More money equals more private tuition, which equals more points, which then equals better qualifications and better jobs. All of this makes the class structure more rigid and social mobility harder to achieve.
Where you come from becomes more important than how smart you are. Even the brightest of working-class children will struggle to reach their potential if they cannot afford private tuition or college fees. It is said that the cream will always rise to the top, but what people forget to mention is that the main feature of cream is that it is rich and thick.
It can be said that inequality begins in the womb. Children from lower social classes suffer from higher infant mortality and lower birth weight. Evidence shows that nutrition and diet have a huge effect on things like intelligence and energy. The cheapest food available is often the unhealthiest, a factor that impacts lower earners more greatly.
The death rate among the lowest socio-economic group is 3.5 times that of the highest in the Republic of Ireland. This is a shockingly high level of inequality and shows the deep divide between Irish social classes. It has been calculated that 5,400 people die each year in Ireland from poverty and inequality. Poor people suffer disproportionately from mental illness, with twice as many patients coming from the lowest social group as from the highest.
Inequality is not a matter of concern only for academics; it is a serious problem of life and death consequences. Part of the reason for this is that the health system in Ireland is fundamentally unequal; where the rich can pay for better healthcare while lower social classes who cannot afford private insurance suffer longer waiting lists.
Inequality affects us all in multiple ways. It leads to high crime rates and increased social tensions. It destabilises the economy, makes recessions more likely and inhibits the economy’s recovery. The richest countries in the world, such as those in Scandinavia, are some of the most equal.
We like to think that success in life is due to hard work and Ireland is a fair country where people have equality of opportunity. If only it were so. In reality, the luck of birth can determine how far you go and if you really reach your potential.