Widening rich-and-poor gap - Our faith in the market is misplaced

Nearly every flashpoint issue bedevilling our world is rooted in how wealth generated in a society is used or shared — or if should be shared at all — to benefit everyone in that society. The eternal stand-off between property rights and the common good remains unresolved and, if history is anything to go by, it is likely to remain so.

The widening gap between rich and poor, the extinction of so many jobs — blue or white-collar — by automation or globalisation has made whole swathes of the West’s population feel betrayed by the system they supported for so long.

There are other issues but the destruction of opportunity, the flattening of the middle classes gave Trump a ready-made, angry constituency. It also fuelled the populism — if that is not an inaccurate tag — behind Le Pen.

It is a strong card in British Labour’s hand in its efforts, so long derided as preposterous, to dethrone today’s disdainful Conservatives.

The consequences of this division — hospital queues, staggering public services, inept regulatory authorities etc — are all around us.

Revenue’s declaration to the PAC that they had collected €61m as part of an investigation into 800 medical consultants — €76,000 on average — is another example of how our system seems so skewed.

These consultants are not unique. Rather, their flexibility on tax seems representative rather than exceptional. It is illustrative, though, that no one in Government felt moved to trumpet a campaign to challenge this professionals’ pick-pocketing but were very happy to launch a conveniently timed campaign to crack down on welfare fraud — especially as even the most energetic welfare crackdown would not recover €61m for the public purse.

Finance Minster Michael Noonan’s announcement yesterday of a levy of up to 3% of land value on unused development land will be included in October’s budget is part of the same narrative. The housing crisis is a direct result of imagining that the market — the high altar of property rights — would look after our housing needs.

This deeply politicised hope did not factor in developers’ legitimate determination to make a decent profit and the reality that unless they could do so, building would stop. This, according to a National Competitiveness Council report published yesterday, has a negative impact effect on the entire economy, bidding up wages, threatening inward investment and curtailing expansion.

The announcement by AIB that it will tell prospective investors that its €8.6bn bad loans problem will be largely resolved within three years is rooted in the same crisis.

The Government decided last Tuesday to sell 25% of the bank which we rescued at a cost of €20.8bn. The first sale may realise up to €3bn.

Speculation around how that money might be used is rife but it seems it may go to faraway bankers to pay down national debt. Any suggestion that it might be used to repair devastated pension funds entrusted to AIB or to rescue small-time investors who put their nursing home money in AIB shares would be laughed out of court.

This confirms again that the market is a one-way equation and until we find a better way to manage affairs we must accept the inequities, the injustices and the cold social realities it supports.


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