Teaching Comparative Government and Politics

Tuesday, November 24, 2015

It's not just distributions of income and wealth

In many (most) countries the distribution of incomes has become more and more unequal. (The distribution of wealth has always been very unequal.)(Think about it.)

Social welfare spending is, theoretically, a balancing feature of liberal economies. Is it?

Sharper elbows: The well-off are grabbing an ever-larger share of spending

PUSHY middle-class types are said to have a knack for getting the most out of the state. With their sharp elbows, the argument goes, the wealthy jostle others out of the way in the queue for doctors’ appointments, school places and other scarce public services. The conventional wisdom is half-right. In absolute terms, Britain’s poor consume more public services than the rich—but, after adjusting for need, studies suggest that the rich tend to get more than their due.

That long-standing inequality may be growing…

[T]he [British] Office for National Statistics (ONS)… estimated the monetary value of certain public services, including education, the National Health Service (NHS) and transport, which combined offer the average household benefits worth £7,000 ($10,600) a year, more than the value of cash benefits such as pensions and jobseekers’ [unemployment] allowance…

Much the biggest of the various services analysed is the NHS, which eats up one-fifth of all government spending. One reason for its apparently growing generosity to the well-off is that the elderly, its main clients, are getting richer…

Yet data for NHS spending on the working population show a similar trend: whereas in 2000 households in the bottom income quintile received 27% more than those in the richest, today they receive the same as each other. One explanation is that the rich are ditching their private health insurance and instead using the NHS…

Just as fewer people are taking out private health insurance, fewer are sending their children to private school. Since 2008 the proportion of children at independent schools in England has slipped… Yet the long-term trend in education funding is steeply progressive…

In 2012 the government raised the cap on tuition fees from £3,375 to £9,000 per year, thus reducing a subsidy whose main beneficiary had been the middle class. Poor students have been protected by a generous maintenance grant and relaxed terms for the repayment of loans. Their participation rate has grown at a faster rate than that of their richer peers since the reform…

The most regressive public service is transport, from which the richest quintile benefit almost twice as much as the poorest. The reason is that they travel more—and by the most expensive means. The state subsidises rail travel by £5 billion a year. Yet intercity trains bulge with well-dressed folk tapping away on laptops; each year the average top-quintile earner travels 2,300km (1,400 miles) by train, five times as much as the bottom earners…

The wealthy also drive three times as many miles as the poor. This makes them big beneficiaries of spending on roads, worth £8 billion a year… Poor people make up ground elsewhere: they use buses twice as much. But bus subsidies are smaller, and the rich use them increasingly frequently…

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