The elite stigmatises wealth

Predictions are fraught with uncertainty but it looks a safe bet that inequality, and the associated stigmatisation of wealth, will remain an obsession in 2014. Indeed if anything the new egalitarianism could turn up another notch or two over the year. For evidence of this contention it is not necessary to review the whole of 2013. The past month or so gives ample examples of how talk of the gap between the wealthy and the rest of society has reached elevated levels.

This phenomenon has nothing to do with the old battle between left and right. On the contrary, such labels have meant little since the 1980s. Instead the new egalitarianism is driven by anxieties within the elite.

Barack Obama provides perhaps the prime example. Back in December he gave a heavily trailed speech in which he said “dangerous and growing inequality and lack of upward mobility” had become the “defining challenge of our time”. He has made the same point before including in his January 2012 State of the Union Address and a December 2011 keynote speech in Kansas.

Sticking to America for a moment the new mayor of New York City, Bill de Blasio, has defined himself in similar terms. In his inaugural speech on 1 January he put tacking the inequality crisis as his top priority. The election of de Blasio has in turn excited what passes for the left in contemporary America.

But new egalitarianism is not just an American trend. In late November the Pope condemned inequality in Evangelii Gaudium (the Joy of the Gospel), a communication with the church’s 1.2 billion members. Among other things he blamed exclusion and inequality for spawning violence in the world.

Nor is Britain an exception. Some may think so given the coverage given to the Margaret Thatcher lecture by Boris Johnson, the Conservative mayor of London, last month. But, as I have argued elsewhere, the speech was more muted than generally assumed.

Under pressure from critics the mayor backtracked even further from his earlier remarks. He subsequently went on to say that: “My speech was actually a warning against letting inequality go unchecked.”

Many more examples should be given but there should be no doubt that the new egalitarianism is a top-down phenomenon. It is rife in elite circles rather than the result of any left wing resurgence.

There are several drivers of this obsession but one of the most important is the deep pessimism about economic growth. When rising prosperity is seen as unrealistic, or even undesirable, there is a strong temptation in elite circles to talk up the dangers of inequality. It is seen as much easier to aim a few harsh words at the super-rich than to generate a more prosperous society for all.

A common conclusion is that shared sacrifice is necessary – an idea endorsed by both Obama and Warren Buffett, one of the world’s richest men. Everyone should be prepared to make do with less, so new egalitarians argue, rather than strive for more.

Despite the seemingly radical talk it is the bulk of the population, rather than the super-rich, who suffer as a result of attacks on wealth.

This comment was first published today on Fundweb.