1. Positive Money Sarah Mirza

3. Sources Banking, Finance and Income Inequality Graham Hodgson 2013 Positive Money Word Doc. How Does The Money System Affect Inequality – Fran Boait 2014 Positive Money You Tube Video Why Inequality Matters My Fair London/ The Equality Trust 2012 – Pamphlet The Spirit Level Wilkinson and Pickett 2009 Book Other Sources – Sheffield Equality Group; The Centre for Welfare Reform; The Equality Trust; Positive Money.

4. What drives the Circuit to Allow the Rich to Get Richer and the Poor to get Poorer? Credit expansion Asset Prices Household and Corporate Debt Remuneration Practices Peer Group Pressure Political Interventions

5. Banks create credit Increase household indebtedness Cost of debt erodes disposable income Top earners grab more share % Incomes fall consumption unavailable Increase demand for credit Assets appreciate Increased credit capacity

6. But Wealth Trickles Down – Doesn’t it? Bank Allocation 1997 - 2007 Non Productive Mortgages 40% Financial Markets – Speculation 37% Credit Cards and Personal Loans 10% Productive Lent to Businesses 13% Figures Fran Boait

7. House in 1996 worth £51,000 Same House 2008 worth £129,000 £192,000,000 paid to banks everyday in UK in % Repayments Low waged workers pay 9.4% of income to Banks Highest paid pay 1.4% of income to Banks In the last 30 years the share of national income paid in wages fell whilst the proportion in profits rose. TNC’s activities are comparable to the economic size of countries

8. In the UK the top 10% receive 40% of total income. The poorest 10% receive 1%. 2010/11 increases in CEO’s salaries of 100 top companies increased by 50% - public sector 2.7% How many years would it take for a person on low wage to equal one year’s pay of a higher wage earner? 209 yrs UK benefit fraud = £1.6bn Unclaimed Benefits = £9.9bn Tax Evasion/Avoidance loses UK Government £40bn per year

9. “Inequality has been going on forever.” So why do we need to worry about it? Differentiation and disparity between incomes is good. It drives aspiration; social mobility; better quality of life and so on. Beyond a certain point increased national income does not improve quality of life – equality does. The smaller the gap between rich and poor means a happier, healthier society. Social/Financial link. Inequality harms everyone – even the rich.

10. Berg and Ostry (2011) suggest that extreme inequality could trigger financial collapse. “The recent global economic crisis, with its roots in the US financial markets, may have resulted, in part, at least, from the increase in inequality.” Barack Obama said inequality was “the defining challenge of our time.” “..if we a are serious about creating new opportunities for all the working people..then we must be serious about inequality itself.” Ed Milliband 2012

11. Oxfam Call to End Extreme Wealth by 2025 Inefficient – depressed demand – rich don’t buy the same quantities Politically corrosive – money secures lobbying interests Socially divisive – rich opt out of state services: seek to withdraw support for state Environmentally destructive – rich more profligate with scarce resources UNETHICAL

12. Wilkinson and Pickett (The Spirit Level) showed that less equal societies do worse in terms of: Mental illness Life expectancy Infant mortality Obesity Children's’ welfare Teenage Pregnancies Imprisonment rates - murders Social mobility Trust “More unequal countries do worse according to every quality of life indicator.” David Cameron 2009

13. Possible Political Interventions 1. Oxfam suggest: Statutory limits on pay and capital accumulation; progressive taxes; agreements to curb tax havens and corporation tax; expand social provision. 2. High paid Suggest: Target social provision; greater regulatory support for market-based alternatives. 3. Banking and Finance Suggest: Borrow cheaper; easier credit; more accessible. Thereby set the money-debt circuit in motion again

14. Video “Could These 3 Simple Changes to Banking Fix the Economy? The central role of rising asset prices in creating wealth and extreme remuneration packages leads to extreme income inequality. It is also undemocratic. The power of the banks to create money means that only 80 bankers in the city of London decide where the money goes. The 650 MP’s democratically elected, have no say and many don’t understand the system.

15. Questions for Discussion What would be the difference if extra money were made available by diverting from other uses, rather than being created by banks? If causation can be shown from money creation to rising asset prices, would the reforms proposed neutralize asset price inflation and create more equality?