Boris Johnson is a charming, intelligent eloquent man. He is also ambitious, dangerous and wrong, and we must be careful that we do not let our admiration for his cheeky tousled locks blind us to his many egregious faults. Were he ever to become Prime Minister he would make us long for David Cameron.
Today’s speech – celebrating extremes of inequality – is tripe of the highest order. I hope that it turns out to be a political misjudgement and will alert us all to the sort of man he is and the sort of views he holds.
It is tripe because it is an egregious example of a commonplace fallacy I shall call the drunk’s fallacy. This is the fallacy that if a little of something is good, more of it must be better – and there is no such thing as “too much”. If a little wine is good, more wine is always better…
Almost no one actually advocates total equality of income. It would, as Boris correctly concluded, remove all incentive to work and to take risks. If I were to earn the same by staying in bed as by getting up and putting in a full day’s work in my business, I’d stay in bed. (Actually, in my case at the moment, that’s a very bad example, because I would earn nothing by staying in bed and I am earning nothing by working fourteen hours a day at my business…. But I digress).
We need an economy where people can earn more by working harder and more productively: a measure of inequality is thus both necessary and inevitable. It does not follow that extremes of inequality are better. In an earlier post I argue that excessive income inequality has an adverse effect on growth, mainly because the rich save more and spend less, thus driving down aggregate demand and yields on investment.
What we need is a fair society. One which pays a fair wage at the top and the bottom of the market. One where people can be valued for their contribution to society, not just the size of their bank balance. Boris’ unbridled Thatcherism repeats many of the claims of the 1980s. It was during this period, under the regime of the late unlamented lady, that we money – earning power – became the main metric of merit. Professions such as teaching and medicine suffered. We stopped admiring teachers for their dedication and began regarding them as much less worthy than bankers, because they earned less.
Boris, your notion is both bad economics and bad politics. Admiration is due to people not for the size of their wedge, but for their achievements, and if the banking crisis has shown us anything it is that we cannot measure achievement only via money.