Britain's Deep Wealth Divide

The only thing I find surprising about this article, is that you find the results surprising.

I've been saying for years, many people in this country live from week to week, dare not go sick and can't possibly afford to switch from weekly pay to monthly. That's reality!

I come into contact with just a few of the hundreds of thousands in that position. It is exactly for that reason, when the Fool, or more recently LoveMoney, talk about saving for pensions (or even anything), for many it's an impossible dream.

Time to come out of your cosseted world and see Great Britain for what it is. No longer Great, but a third world nation scamming others into believing otherwise.

That is just one of the reasons I find these excessive bonuses (in whatever industry) so obscene. There are people seriously struggling, and all we can talk about is paying whoever £1.5m bonus. They're 'aving a laugh!

The truth is, in spite of New Labour sound-bites, there are the rich, the middle classes and the poor. It's always been that way and nothing has changed. Furthermore, it is not in the politicians interest to change anything. They need the workers on the minimum wage to make the country run.

They are simply slaves without chains!

Quite so BarrenFluffit, but I'm talking about people down to their last 50p come pay day and the only reason they get home, is because they bought a weekly bus ticket soon after they were last paid.

"Half of all households in Britain had gross financial wealth of £7,200 or less"

With capital gains tax kicking in above £10,200 (IIRC) you'd need a large investment (or exceptional returns or very poor planning) if you are to be caught. If 50% of households are nowhere near this then are ISAs merely a way of shifting the tax burden from the rich to the poor?

JohnC - Couldn't agree more. I also think the safety net, be it the government bale out, the welfare state, or the local charity has, over the years, promoted a false sense of security. I have lost count of the number of people I have encountered over the years who seem to have abandoned the art of common sense and have convinced themselves that someone somewhere will always pick up the tab. Sad thing is, it hasn't always been this way. I know old folk who won't even let you help them out of the car, they just have too much pride and a sense of independence. It used to be called backbone but it's a touchy feely subject these days which I believe is actively discouraged!

Of those in work some are highly rewarded - and I don't mean lawyers or bankers.

The train-drivers who recently struck leaving hundreds of thousand of commuters struggling to get to work had a salary of 38k a year, £730 for a 35-hour 4-day week; Sunday work is entirely voluntary - for a much higher hourly rate. They and their families also have free rail travel.

We live in a UK society where if you spend everything you earn as you earn it you can rely on social benefits when you retire, lose your job, or are taken sick. I know it is not much but remember it is paid for by all those that have saved for their retirement or a rainy day. If the savers suffer job loss, sickness or retire they will have to spend almost everything they have saved before they qualify for State handouts. Can you wonder why so many adopt the spend it now and blow the future philosophy. I only wish I knew how the change their attitudes without allowing them to starve to death.

I, too, agree with johncolescarr, supasap, Fabius1 and Ginger125. I've just been to view a property; its price was reduced by over 22k because it's been on the market for six months without an offer. The young owners bought it just over three years ago for 128k on a 125% mortgage and had been trying to sell it at a price to the buyer not significantly under 200k, taking into account stamp duty, legals etc. Now they "can't" sell for less than the original mortgage. What planet are they living on? My offer of 115k on a slightly bigger flat was accepted with alacrity.

"average household worth £204,500 -- made up of property, financial assets, physical goods such as antiques, and pension savings."
and
"private pension investments making up another 39%."

This suggests that the average private pension investment is £79755 (39% of £204500).

This cannot be counted as £79755 of personal wealth as it will have to be used at some stage to buy an annuity which at current rates will produce about £5500 per annum which will prove to be a rude awakening for anyone taking comfort frrom this article.

The final chapter of one of the most influential books of the 20th century begins:
"The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes."

It is said that, when Queen Victoria asked Lord Melbourne for his views on extending education to the poor, the Prime Minister replied: "Why bother the poor? Leave them alone."

The book referred to above is The General Theory of Employment, Interest and Money by John Maynard Keynes, published by Macmillan in February 1936.

In economics it usually takes about 100 years for common sense to become common practice . As for the poor, theirs is the kingdom of heaven, provided they're poor in spirit.

How refreshing to see a mention of JM Keynes's book, that has become a financial bible for many, but not all,. economists. You may have noticed that Paul Samuelson another, but different authority, has just died. But have you also noticed that The Economist has started a weekly column under the name Schumpeter, another highly influential figurer who was critical of Keynes's ideas. His watchword was creative destruction - when enterprises fail, let them, something better and innovative will arise. The government's failure to follow this principle has been disastrously expensive. We suffer, I think, from another economic theory at the moment, neo-classical economics as advocated by Ed Balls, the force behind Brown's blinkered management as Chancellor. You may recall ' neoclassical endogenous growth theory' that Brown mouthed liked a mantra, without, I suspect, fully grasping what it meant. Balls was utterly dazzled by the flood of money from the City that powered the boom in housing, finance and services. These are withering without any thought given to a replacement - in fact the inept vote-catching attacks on the 'rich' will tend to kill of what remains. With apologies to Hilaire Belloc:

It is the duty of the wealthy man
To give employment to the artisan

But if you drive away the wealthy men
Who pays the artisan his wages then?

That thing about wealthy men and artisans reminds me of Peter Schiff's analogy for the global economy. He compared it to an island on which five Asians and one American have been stranded. The castaways get hungry and devise a system in which the Asians divide up the work of hunting, farming, cooking, preparing, and serving the food, while the American is assigned the job of eating.

The American is the rich man. By claiming ownership of the means of production (or in this case, the source of the money) he can provide work for the artisans, but his net contribution is negative. To answer Belloc, if they chased him away, they'd pay their own wages and have more to eat.

Perhaps that analogy is lacking because some rich people have created real wealth. Or have they? If the American found iron ores on the island he might decide to use it for a socially beneficial purpose, or to leave it in the ground if no purpose can be found immediately. He might also try to convince the islanders that women won't want to touch their faces if their razors have only 3 blades. Then he can employ the islanders to extract the ore, make it into 4-blade disposable razors, use them each for a month and bury them elsewhere on the island. He will call this wealth creation and expect the islanders to feed him because of it.