Widening the gap between rich and poor is a recipe for disaster

SOMETIMES when things change we look back and realise we didn’t know we had it so good.

That doubtless will be the thought of so many in Ireland and many other countries in the future.

A number of reports out during the week pointed up some of the realities — some welcome and some questionable.

Because of the amount of money being repatriated by the multinationals, GDP figures for the country are an aberration as anybody living a normal life in the country knows that the average Irish family is not almost a third more wealthy than the average British, German or French family.

Eurostat has come up with a new way of measuring just how wealthy ordinary people are and it appears to be much closer to the reality.

It looks at the consumption of families and takes into account the consumption of services and goods provided by the state in health for instance, as well as the money people pay out for everyday bills.

Irish people are only very slightly above the average for the EU, and this has fallen over the past few years reflecting the reality that services have been cut back, savings increased and unemployment has risen.

On the other hand, as many suspect, prices are higher than they should be, especially compared with our EU neighbours. Costs have been falling, but are still the fourth highest in the EU — almost a quarter above average.

Something not as well known revealed in another EU report showed that Ireland has one of the greatest, if not the greatest, disparities between the best and worst paid.

But the tax structure and social transfers were the most successful in the EU in reducing this inequality, cutting the numbers at risk of poverty from 22% to 14% for instance.

This was largely maintained during the first few years of the recession up to 2009 thanks to the way much of the cuts were made, but this will change with the next round of austerity, the report warns.

It says they are more likely to affect the most vulnerable, including families with children and basic deprivation levels are likely to increase as those out of work continue to be unable to find employment.

Unfortunately, ensuring people are worse off is part of the overall plan to get the country back on its feet on the basis that if people are desperate enough they will find work.

And if they are cheap enough to employ, employers will decide to create the jobs. So that means cutting unemployment benefits and the pay of the lowest paid.

While many may argue that the country can’t afford anything else, much of the most credible research, including that from the IMF, says that the greater the inequalities in a country, the less likely it is to thrive.

However, the country is being subjected to a lot of strange thinking.

The Commission report on the austerity programme also released during the week was a little short-tempered with Irish people for failing to understand how much private shareholders lost in the banking debacle. Private investors — about a quarter of them Irish — had lost around €65bn, and, the report pointed out, this was more than the €63 billion the Irish taxpayer has put in.

It fails to say that the Irish taxpayer had not placed bets on these banks.

And it has not pointed out that, for many, the 40% of GDP the banks are costing the taxpayer is just the tip of the iceberg for many families struggling to pay off mortgages now up to twice what their homes are valued at, or the loss of their potential for the future.