BackIt isn’t inequality that led to Brexit
Data shows that inequality in the UK has been coming down since the nineties and the early noughties
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Ever since voters in the United Kingdom shocked the world, as well as large swathes of their own people, by deciding to leave the European Union, many voices have been quick to identify globalization and the inequality caused by it as the trigger for the unfortunate event.
According to this theory, globalization benefits the educated and those with access to skill and capital, leaving those at the bottom rungs of the economic ladder in dire straits.
It’s a plausible theory and much data has been collected by eminent researchers such as Messrs Piketty, Branko Milanovic et al in support of it. But as far as the UK is concerned, the data does not fit the facts.
The chart shows why. The data is taken from the UK Office for National Statistics and shows the Gini coefficients for equivalised disposable income in Britain since 1977. Eurostat defines “equivalised disposable income" as “the total income of a household, after tax and other deductions, that is available for spending or saving, divided by the number of household members converted into equalised adults; household members are equalised or made equivalent by weighting each according to their age". And the Gini coefficient here is a measure of the inequality in the distribution of this equivalised disposable income. The higher the coefficient, the higher the inequality. The chart shows that inequality in the UK has been coming down since the nineties and the early noughties.
Indeed, as is obvious from the chart, the big rise in inequality in the UK occurred in the eighties, during the Thatcher years, with the Gini coefficient peaking in 1990, the year when the Iron Lady finally left office. Given her policies, that was hardly a surprise. But what’s relevant here is that there has been no spike in inequality in the UK in recent years and instead it has come down a bit. Citing inequality as a reason for Brexit, therefore, flies in the face of facts.
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