Tuesday, February 12, 2008

A Toast to Our Wealth

The news this morning that Irish households have combined wealth in excess of €1trillion is good news indeed. But already there has been the inevitable carping about 'inequality' and 'affluenza'. We are all familiar with the truism that 'the rich get richer and the poor get poorer'. In other words, an increase in inequality (however measured - a debate in itself) leads to an increase in poverty. This is utter nonsense of course.

As I noted in a previous post, poverty is in decline in Ireland - not that the poverty industry is shouting about it. Yes, we have had an increase in inequality: especially between those who own a home, and those who don't. But so what? The thing that would be an affront to our moral sense of fairness would be the co-existence of extreme poverty alongside extreme wealth. But what we have in Ireland is the co-existence of materially comfortable standards of living for those on social welfare or pensions, alongside substantial material wealth for the less than 1% of the population worth over €1 million each (and a tiny handful worth a great deal more than that).

In a country like Ireland we are dealing with relativities - not absolutes. A person on social welfare is poor relative to a person earning the average wage - but they are wealthy relative to the 1 billion people around the world living on less than $1 a day. The average millionaire is poor relative to the average billionaire - and we're all poor relative to Bill Gates and Warren Buffett. But so what?

I was at a talk organised by the Friends of the LSE in Ireland last night in DCU. Professor Danny Quah was the speaker, one of the world's leading authorities on globalisation and inequality. He pointed out that globalisation has lifted more than half a billion Chinese out of grinding poverty, more than have ever been lifted out of poverty by aid or charity.

Moreover, he pointed out the extraordinary success enjoyed by Ireland over the past fifteen years or so relative to many other countries. Capitalism has been good for Ireland - so let's be grateful for our wealth and success; and let's inspire and guide others to follow in our path. To hell with the begrudgers!

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