Meet austerity's millionaires

Britain's harsh austerity measures have produced a sharp decline in real income and quality of life for the majority of the country; but the number of people earning £1M+ has doubled and is at an all-time high.

Official figures reveal that 18,000 people now earn at least £1m – the highest number recorded by HM Revenue & Customs. In 2010-11, 10,000 earned more than £1m, and in 1999-2000 there were only 4,000 earning such a salary.

There is also growth further down the salary brackets, with 5,000 more earning £500,000 to £1m in 2012-13 compared with 2010-11, an extra 31,000 earning £200,000 to £500,000, and 7,000 more earning £150,000 to £200,000.

The figures will increase concerns that the trends of the 1990s and early 2000s are continuing, with a growing disparity between the top-earning 1%, many of whom work in finance, and the rest of the workforce. In sectors such as manufacturing, construction and hospitality salaries have been squeezed in recent years. A recent report showed that if low to middle earnings were to rise by the 1.1% a year above inflation achieved in the past, average annual household incomes in this group would take until 2023 to reach £22,000 – the equivalent of where they stood in 2008.

Super-rich on rise as number of £1m-plus earners doubles [Daniel Boffey/The Observer]


  1. Compound inflation will naturally cause the number of millionaires to increase over time. It’s a static benchmark against an ever-declining purchasing power of money. Not defending, just saying…

    1. forcing one person to do the jobs of two people will naturally cause the number of millionairse to increase in a short amount of time as well.

      it’s easy, when there are no other jobs.

      ed: millionairse. yes, indeed.

    2. Sure, eventually. Not very fast though, given the UK’s rate of inflation:  That explanation also fail to consider the 3rd paragraph of the quote. (More and more people would also be making £22,000.)

      1. In case it wasn’t already apparent how facile this is: I invite you to consider how long it will take for inflation to increase the net worth of people who own £970,000 in assets to over £1m.

        1. Given April’s rate of 2.4%, that would be log(1000000/970000)/log(1.024) years. (A little over 1 and a quarter.) 

    3. I remember having that argument with my dad when I was 14.  Influenced to marxism but drawn to the right wing by his business success, he pointedly refused to believe the numbers I calculated (correctly) demonstrating that in an inflationary environment, the rich can’t help but get richer in real terms.

  2.  Can anyone put me in touch with with someone from one of the Maker Faires who can make some replacement parts for my guillotine? Or I might be able to apply some 3-D printing for come of the parts if I can find the specs.

    “Look at that guillotine. Just look at it!”

      1. Bastard! I was about to reply with damn near the same thing verbatim!

        edit: that said, I had to like your post for reading my mind.

    1. There is also growth further down the salary brackets, with 5,000 more earning £500,000 to £1m in 2012-13  …

      See – trickledown does work. So, people. People. Guillotines? Really?

      There’s a perfectly adequate supply of lampposts.

      1. lampposts are so .. gauche.. in this day and age. a finely crafted guillotine is the execution method of the future.

        they come in taupe, barn, fire tiger and smellovision. custom colors are available, just ask!

  3. Person 1: hey man income inequality sucks.
    Person 2: yeah, I would totally drop my income 10% if the rich would drop theirs 20%. That would reduee the inequality.
    Person 1: yeah for sure…uh wait, no I really would not do that.
    Person 2: yeah well maybe not but I definitely would not take a 20% income increase if the super rich got a 30% increase because that would just make the problem worse!!
    Person  1: yeah that would just make the problem worse….wait I would do that.
    Person 2: yeah so would I.

        1. the person earning 20k a year would take a ~4k raise. even though the millionaire would take a ~300k raise. good point. to reiterate: interesting argument.

          1.  Right. The average sane person will take a big raise even if the rich get even richer. People just want their own circumstances to improve. Income inequality is a canard. It is used as a rally cry to whip up the masses but does not mean anything. You could reduce it and help nobody. Everybody making 5K per year would mean inequality = zero. If the 99% income doubled tomorrow and the 1% tripled that would increase inequality but people would love it. The real problem lies elsewhere.

          2. That’s totally wrong. I smile it’s so wrong. More equal societies are happier and more secure and less susceptible to the Guillotine. The whole point of having a ‘good’ country is relative equality, which correlates with happiness, health, higher productivity. It’s a positive feedback input. If you want to destroy a country, plant the seeds of gross inequality.

            I don’t think it’s a matter of abstract problem solving or even ideology. Take basic all_American consumer capitalism: a relatively minor tweak can create gross inequality.

    1. Person 1: hey man income inequality sucks.
      Person 2: yeah,  I would totally pay a 10% tax rate if the rich would pay 20%. That would reduce the inequality.
      Person 1: yeah for sure…uh wait, yes that actually works very well!

      1.  That is the system we have now. The super rich pay way way way more in taxes than the average citizen.

        1. Again, it’s all relative.

          The super rich pay a lower percentage on the vast majority (if not all) of their income.  And that relative pittance does not in any way impact their monthly budget.

          You might want to read what the number one Socialist in the US (according to the Republican party) has to say about paying relatively less in taxes than his secretary: Warren Buffet.

        2. And they still have more money than they can plausibly spend whereas other folks don’t even have enough to eat.  Really fascinating what passes for “ethics” 21st century industrial society.

        3. So don’t say that people won’t accept a decrease in their absolute income level even if it means an increase in their relative income level compared to the average.  We do it all the time.

    2. Yes, one poor person and one rich person receiving raises would probably work like that. And since it’s only two people in an economy full of others whose salaries stayed the same, the difference would hardly matter to society.

      Of course when everyone gets a higher salary that only changes the value of money, so is not actually anything like the individual raises at all, and total wealth is known not make up for inequality on that kind of scale.

      But yes, one poor person and one rich person receiving raises would probably work like that.  So kudos, you’ve shown why macroeconomics takes more than simplistic analogies.

      1.  My example works on any scale. Many things might improve income inequality but hurt all people involved. An environmental catastrophe might hurt the rich more than the poor. A great depression might cut the rich income by 50% and the poor by only 30% which would help inequality but hurt everybody.

        1. Environmental catastrophe?  Seriously?

          My best friend just lost her home to a flood (in an area that had never flooded in recorded history).  The difference for her family, because her extended family had an available condo for them to move into for the 6-8 months the federal process takes to rebuild, has made all the difference.  Most people in her neighborhood are either illegally (and dangerously) staying in their homes  — because they have nowhere else to go and cannot afford a hotel — or else going into terrible debt putting a temporary roof over their heads.

          The rich would simply BUY a different house or condo for the interim and let an assistant deal with the day-to-day insurance and contractor dealings.

          And arguing that “only” losing 30% of income for a poor person during a great depression isn’t that much worse than a rich person losing 50% at the same time would get you an “F” in Econ 101.  First, job loss means a significant number of poor people lose 100% of their income.  Second, losing 30% of $15,000 is not the same thing as losing 50% of $1,500,000 when it comes to putting food on the table….or having a room with a table to eat in.

          1.  That is pretty much my point. A 50% drop for the rich and a 30% drop for the poor increases equality. But it hurts the poor a lot more.

          2. Actually, it doesn’t necessarily hurt the poor at all as long as prices also drop by more than 30% — which they probably would under this incredibly implausible scenario.

            Do you really think the incomes of an entire economy could drop 30% or more without any impact on prices? I think someone might need a remedial econ class here.

        2.  I doubt very much that an environmental catastrophe would hurt the rich more than the poor, from knowing how useful money is, and having seen some catastrophes in my time. Unless it was a very specific catastrophe that only hit gated communities and so forth. Do you know where we might acquire one of those? Cos I’d like one.

          1.  How much tax money is spent on contracts with companies owned by the 1%?  That is, how much tax money is ultimately paid back to the 1% anyway?

          2.  Why? We could all be gainfully employed building them new McMansions. Yay for Trickle-Down!

        3. That’s an even worse argument. Murdering everyone who loses their home would reduce homelessness and help nothing, but you would be alone if you conclude that proves homelessness is not a real problem.

          Income inequality doesn’t mean the world would be better leveled in fire; it is not the only conceivable problem we could face. But it is still a very significant one, as confirmed by people who actually look at societies work in reality.

    3. If inequality lead to “you get 20% super rich dude and I get 10%”, you could probably make an argument.  Unfortunately, that isn’t what is happening.  It is “you get 20% super rich dude, and I get fucked”.

      It isn’t shocking,  Our political system panders to wealth.  I am not sure about the UK statistics, but half of all us politicians are millionaires.  Rich people get access to their congressmen beyond a form letter reply.  Send a pile of money towards a politician, and suddenly they start passing bills that just so happen to be word for word what your lobbyist was asking for.  When vast amounts of wealth let you set the rules, even if you are not intentionally being a bastard about it, you tend to set the rules such that they are in your favor and likely fucking someone else.

      Look, I would call myself a left libertarian.  I think governments blow at managing the economy.  That said, what we (the US and the UK) have is nothing even vaguely resembling a healthy market economy.  Entrenched interested write the utterly fucked rules that the rest of the world has to live by.  Rule by corporations and oligarchs should make any human, left or right, sick.  It isn’t free market, and it sure as shit isn’t democratic.  Politicians only heed democratic forces just enough to not get tossed out, after rigging the living shit out of the game.  They don’t work for you or me.

      Rising inequality is a sign that something is wrong, and in a system where more wealth means you get to write the rules that determine who gets wealth, it should scare the living shit out of you.

      1.  I basically agree with everything you say. As a friend of mine said ” you could take all the money from all the rich people and give it to the poor people and the rich would have it back again in a blink of the eye”. But people do not care about inequality, people just want more money. Plenty of things will reduce inequality and hurt all people involved. Income inequality is a “false rallying cry”  that means nothing …like “Go Tigers” as a sporting event. When you see the term  your ears should perk up. So as what to do about it my suggestion is first figure out what the real problem is and focus on that.

        1. I basically agree with both of you. But I think if we look at the Nordic model countries we see the opposite of what  you are saying, Proteus. Many people are fans of progressive taxation which makes it very difficult to become very, very rich. Doctors make more than bulldozer operators, but not *that* much more. The point of life is not getting rich. The point of life is living well. Happiness rises with income until people have the basics and a little left over. As income grows beyond that, happiness does not. My point is to sketch out that it’s possible to have consumer capitalist societies that value happiness and social harmony more than money, and therefore create policies that result in relative equality. 
          Also, I find people care more about fairness and justness than money. We often see people cut off their noses to spite their faces because they perceive something unfair. In this situation, they do things to hurt their own position to prevent someone else from an unjust reward.

          What did we do to end the Great Depression, which also was accompanied by insane levels of inequality? New Deal; progressive taxation up to 90% in USA, etc.  

          1.  You are slightly closer to my position now but to repeat: income inequality is not the problem. So talking about it and solving it is not the answer. As you said happiness lies elsewhere. Inequality is a huge issue. But not with income. With justice, racial equality, educational equality, fair play throughout the justice system and on and on. In fact income inequality MIGHT VERY WELL RESULT  by getting more equality on the important issues. And it won’t matter since money does not and will not and will even less so =  happiness.

        2. But people do not care about inequality, people just want more money.

          You’re projecting your own lack of empathy onto everyone else.

          1.  It is not lack of empathy, it is lack of respect for envy. Your reply in itself says inequality alone is enough to make someboy unhappy. Somebody has a better boyfriend, more money, a better car and more stuff so I can be unhappy and get sympathy? Sorry. You need to think about the comment you just made and what it implies. My position more fully: “healthy people do not care about inequality, they care about solving problems”. Please don’t take my comments out of context.

          2. This has nothing to do with envy.  Again, you’re simply not engaging with the arguments based in economics research that suggest that income inequality really does have bad effects on society (i.e. is a problem worth fixing).  You’re simply ignoring those arguments and asserting over and over that it does not.  This is not a good way to convince anyone of anything.

          3. You’re just making shit up to justify your belief system, and from here, it looks a lot more like personal psychology than reason or research.

          4.  No, those people are assholes. People (like me, f’rinstance) who work long hours and can’t pay the fucking bills suffer from income inequality, not folks who are sad cos they don’t have a very nice car.

    4. Except studies show that isn’t true.  People are very sensitive to RELATIVE comparisons.  If they make more money but they know people around them are making even more money, then they are less happy than if everyone loses money, but they’re losing less so it’s like they have “more”, relatively speaking.

      1. Somewhere there are a bunch  of people who have way more money than me. Ergo I am unhappy. No further  info required.

        1.  Weird.  I feel sorry for the people who need money to validate their worth as human beings.  I’m pretty happy myself.

    5.  This argument is facile.  That is, it seems to make sense when one applies it at the level of individuals (as articulated by you) but in the aggregate it doesn’t really work.  If every millionaire took a 30% raise that would affect the rate of inflation and cost of living potentially to the point where a 20% raise for everyone else would be a loss rather than a gain.

      Looking at aggregate data the most dangerous, crime-ridden, and poorest societies are highly unequal and the most stable, safest, and best-fed societies are the most egalitarian.  Argue with the aggregate data.

      1.  Income inequality is not a problem. It is a non issue. It is irrelevant. It is a rallying cry to whip up the masses. It brings out those who simply envy the rich for no reason. The real injustices and inequities are racial, educational, equal opportunity, access to healthcare, access to political power and so on. Solving those might very well result in an increase in income inequity. People can accept a famous singer or ball player having higher income, but social injustice is unacceptable. This issue is a distraction from that.

        1.  Those issues you cited are fundamentally driven by wealth inequality however. You cannot solve any of them without tackling wealth inequality.

        2. That’s not an argument, it’s a simple assertion.  Income inequality doesn’t seem to be irrelevant based on the data:

          The real injustices and inequities are racial, educational, equal
          opportunity, access to healthcare, access to political power and so on.

          What’s unjust or inequitable about education or access to healthcare?  The fact that low-income areas have poorer access to quality education and healthcare than wealthier areas?  You don’t think that has anything to do with income inequality?  That seems prima facie ridiculous to me.  Boston public schools are not as good as Wellesley public schools because Boston has a much less robust tax base.  Wellesley has more purchasing power than Boston does when it comes to education.  This is a result of income inequality.  Since access to political power is also dependent on access to money the story is similar there.  You seem to be arguing against your own position here.

          People can accept a famous singer or ball player having higher income, but social injustice is unacceptable.

          An individual singer or ball player earning a little more money than they did before does not appreciably affect income inequality.  But income inequality does appreciably affect the social injustices just discussed. This “point” of your would seem to be completely irrelevant to the argument you’re trying to make.

          1. You seem to think income inequality and income are the same thing. I don’t. Read your above comment with my view and you will see my point.

          2. You seem to think income inequality and income are the same thing.

            I do not think that and nothing about my comment would suggest that I do. If you’re having trouble understanding try asking questions instead of trying to read my mind.

            You have yet to even begin making an argument for your position.  Begin by rebutting the businessinsider post I linked if you’re having trouble figuring out where to start.

          3.  Sorry but I am not getting a reply button available on your last post.

            If you take out the word income completely from your post above that is my position. You keep using the term income inequality and then making an argument for simply equality.

          4.  Again, no I am not.  Again, if you do not understand my argument it is probably better to ask questions than to assume what I am trying to say.  Again, you have not made a single argument to the effect that income inequality is irrelevant.

            At the very least be specific about what you are trying to say.  If I take the word “income” out of any of my comments above what I get is ungrammatical nonsense, not a coherent position on anything.

          5. Whenever anyone poses a false dilemma I know they’ve lost the argument.  I don’t actually have to choose — different people can address
            different problems at the same time and even one single person isn’t limited to only working on one problem.

            You’ve finally made an argument but it’s an incredibly weak one.  The US is an outlier in terms of both income inequality and standard of living.  If you had compared the US to other industrialized nations instead of picking out undeveloped nations to compare it to you would see that the US has worse educational outcomes, worse healthcare outcomes, and in most cases less economic freedom than the industrial nations with less income inequality.  If you pay special attention to nations with higher income inequality than the US you would see that they are almost universally pretty bad places to live from the perspective of a typical US

          6.  Or you could choose one of the numerous other developed countries that have a higher standard of living than the US and have lower income inequality too. It’s not the false dichotomy you make it out to be.

          7.  …and, at the risk of beating a dead horse here, one of the main reasons that the African countries you mention have a lower quality of life than America is due to the fact that they have no ability to spend their way out of socio-economic problems because of price distortion due to, you guessed it, income equality (in terms of per-capita GDP) between them and the G20 nations.

            If the cost of improving your infrastructure to a basic level in order to attract foreign investment is more than your entire country’s GDP because the engineers with the knowledge expect to get paid what they would if they were working in a G20 country then that option is no longer available to you.

            Why would anyone want to work for less than their market value other than sheer altruism? If I’m a highly-qualified, sought after teacher, for example, why would I work for just above minimum wage in a failing inner-city school, when there are communites that are rich enough to pay me many many times that rate because they can afford to and appreciate my market value.

            All of the problems that you outline as irrelevant to income inequality follow the same model; if the rich have distorted prices to the point that you can no longer afford to improve infrastructure/decent teachers/non-corrupt police/competent local government, then you’re no longer going to be able to improve your situation. This is simple price distortion, and the wider income inequality gets, the less struggling communities and individuals can afford in order to improve their situation.

  4. “The figures will increase concerns, […]”

    Yes, but luckily no one that matters needs to be concerned. Keep calm and carry on.

  5. As I recall, Joseph P. Kennedy, Sr. enormously enlarged his fortune during The Great Depression, from wiki:

    “In 1929, Kennedy’s fortune was estimated to be $4 million (equivalent to $53.5 million today). By 1935, his wealth had increased to $180 million (equivalent to $3.01 billion today)”

    And then his children went to become political leaders, so…

    Same old, same old.

  6. Yes, it’s truly shocking that tax increases lead to wealthy people being wealthier in a country where 50% of the economy is government spending.

  7. The UK is on a downward slope and the far right is making more noise than ever. Time to pack up and leave. Only 4 more months to go…..

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