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Inequality is rising in Ireland.

Important research from Unite shows Irish Times wrong on most important social issue of our time.

By Suzie Mélange.

In a report entitled, ‘Hungry bellies are not equal to full bellies’, to be launched on Monday 1 March, Unite Trade Union in the Republic of Ireland will provide lengthy research-based evidence of the growing inequality and deprivation in our society. The report was produced with the assistance of Dr Conor McCabe.

Ireland’s fragile boom was sustained by a dangerous mix of hubris and myth-making:

First, an ‘Economist’ or appointed ‘expert’ would produce an ‘economic analysis’ to tell us that what we were seeing before our eyes – an impending catastrophe – was in fact a mirage. Second, the media would take that ‘analysis’ and bestow upon it legitimacy and gravitas, with unhealthy dollops of scorn for naysayers. Third, Politicians would then lift this economic hocus pocus and media spin and use it to define political direction.

The methodology is still in use.

On 5 December 2020 the Irish Times, once known as the ‘paper of record’, published a gushing piece selling Ireland again as a world-beating nation where wealth was rising, and inequality falling, at the same time. RTE’s Brainstorm website had published a similar article on 19 November, by the University College Cork Economist Seamus Coffey.

The claims made by Leahy and Coffey are misleading and unfair. There is a danger that, unless challenged, these claims will become accepted as facts.
Disproving them is not a straightforward process because the issues at hand are somewhat technical. But Unite has applied itself to the task. It makes the case that both Coffey and Leahy use specialist terms and methodologies and in the process gloss over the limitations, contradictions, and failings of the surveys they put forward in their articles as objective and unassailable evidence of their claims. In the hubristic words of Leahy, “the data is the data, the facts are the facts”; while for Coffey, “Everyone can have their own opinion on the best way forward, but they cannot have their own facts”.

In the time-honoured way Senator Jerry Buttimer, speaking in the Seanad on 14 December, referenced both authors and stated that they had both showed that in Ireland ‘people are getting richer and we were becoming more equal’. He seized upon the narrative to celebrate these “facts”, namechecking the “paper of record” (though the Irish Times itself now prefers the word reference to record) on the Oireachtas record in doing so.

But falling inequality is not a “fact”. Unite claims it is a conclusion drawn and presented from incomplete and deeply flawed data:

  1. It is wrong to present the “Gini Co-efficient” as pointing to a fall in income inequality without any explanation of the serious and acknowledged systemic flaws in the “Gini” method. This method (Gini) consists of a survey of a small number of self-selected households, such method being known to under-report high incomes
    A more universal set of figures based on actual taxation levels which points in the opposite direction, to a rise in income inequality, needs to be acknowledged and included. The usual one is that of the income of the richest 1% relative to others.
  2. Income inequality itself does not suffice as a measure of economic inequality anyway. It is but one of at least seven, according to left think tank, TASC. The reason why a wider assessment of inequality beyond mere incomes is necessary would appear to be obvious, but it can be stated as follows – if that which we all need to live including shelter, food, healthcare and other essential needs are removed from an assessment of inequality, and mere income is assumed to be given to us free of these needs, then of course inequality can be presented as falling.
  3. There are serious issues with the historic nature of data presented as showing falling inequality in any event, with some key data relied upon dating back to the ‘Celtic Tiger’ period up to 2007 – before the financial crash of 2008, the unequal ‘recovery, and now a global pandemic
  4. Other data which Unite present show “zero real income growth” from 2007 to 2017 but is ignored in the reportage, even though the source of that data is relied upon in other ways.
  5. There is no discussion of wealth inequality – even though we know from international research that wealth is more unevenly distributed than income.
  6. In his article, Leahy uses three different terms for inequality as if they are interchangeable. But they are not.
    He starts off with economic inequality. He says that “One of the most corrosive trends in western democracies – a social and economic problem that has impoverished millions of ordinary people and fuelled the rise of far-right populists from the US to Britain to Europe and beyond – is the rise of economic inequality”.
    Leahy does not provide a definition of the term but according to TASC, economic inequality “refers to the unequal distribution of material resources – that is the resources people need to attain goods and services to satisfy their diverse needs and to flourish as individuals”. It is clear therefore that this refers not only to income, but also to access to essential services such as health, education, childcare, homecare, and housing. It also relates to personal capacities and how this affects inequality, such as illness or disability.
    TASC, which ironically Leahy cites, says that “economic inequality is about more than income, since it is only one of the material factors that affect people’s ability to flourish. Income disparities may matter less in a society with strong universal public services than in a society without them”.
    When measuring economic inequality, TASC looks at seven distinct yet interrelated factors. These are: income; wealth; public services; tax; capacities; family composition; and the costs of goods and services.
    In his article, Leahy goes from economic inequality to immediately talking about incomes, which is only one element of economic inequality. He then moves on to equate income inequality with “inequality”. What started off as a complex, interconnected dynamic involving income, wealth, services, personal capacities, and access to public services, tax, and family composition, is therefore reduced to income alone.
    Leahy has to do this because the main evidence he provides comes from the economist Seamus Coffey and his writings on income inequality.
    He does not say to which specific articles by Coffey he is referring; but on 19 November 2020 RTÉ’s Brainstorm website published an article by Coffey which tallies with Leahy’s line of high income growth and falling inequality. In it Coffey gives a definition of inequality. He says, “When used on its own, ‘inequality’ is typically a shorthand for inequality in disposable income, the money available for households after the addition of social transfers, the deduction of taxes, and before any bills have been paid”.
    This differs significantly from the definition of inequality used by TASC, and as with Leahy, it equates the length and breadth of inequality with one particular element only: disposable income.
  7. The methodology is skewed because in Ireland one of the two standard measures of inequality shows income inequality falling (the Gini coefficient, which Coffey uses), while the other shows income inequality rising (the share of income to the top 1%, which Coffey does not use).
  8. And Gini coefficient is peculiarly unreliable in Ireland. Unlike taxation-based measurement of income the Gini coefficient for Ireland is not based on information on the 1.7 million households in the state but on a small sample of them – 4,183 to be exact (around
    0.2 per cent of the total).
    The survey is voluntary. In 2019 the CSO invited over 9,000 households to take part in the survey but in the end only 40% agreed.
    The CSO employs around 100 people to carry out its work, but often they call to a house and not everyone is at home. They then conduct interviews “by proxy” – that is, information is provided by “another resident of the household due to unavailability of the person in question”. Up to 50 percent of all interviews for the income survey are by proxy, which gives rise to issues “with the quality of data for proxy responses for certain variables”, according to the CSO itself.
    TASC said that such surveys “have well-known limitations when it comes to the measure of income, and hence inequality. Being voluntary, non-response is a problem among the rich in particular, and high incomes tend to be underreported when they do respond”.
    Another distortion is that household surveys tend to undersample those in the extreme tails of the income distribution. As a result, they are not a reliable source of data for examining the nature of income inequality at the very top.
    Because of all this, in the case of the Gini coefficient, the raw data collected by the CSO are subject to a series of statistical weights, measures, and guesswork in order to compensate for gaps in the interviews; before being put through a formula with its own weights and measures in order to produce a so-called measure of inequality. In the end it’s not well-described as a fact.
  9. These factors help explain the difference between the Gini coefficient, and the growth in income share to the top one per cent. Only one of these is genuinely national in scope, and it happens to be the one which suggests rising income inequality. It is also the one that Coffey ignores.

In addition to survey data and analysis Unite will publish testimonies from Basket Brigade, Inner City Helping Homeless, SPARK, Traveller Visibility Group, the Muslim Sisters of Eire and Penny Dinners. They speak to an Ireland of growing economic inequality. We already know that enforced deprivation rose in 2019. According so Social Justice Ireland there are 680,000 people, including 200,000 children, living in food poverty. We know that pre-pandemic rents are at their highest rates ever, running between 48% and 68% of the median wage in Dublin. We know that close to 1 million people are waiting to see a Consultant. When the cost of essentials is removed from social welfare or workers’ incomes we see real, acute and growing need for support in providing shelter, food, fuel and healthcare. ICCH speak of: “an increase of over 400% between 2015-2109 in the number of homeless children”. Homeless people die on our streets at an average of well over one death per week.

But it is the data that speak most definitively.

Unite’s paper shows the Irish Times’ Pat Leahy is wrong about inequality. The question is why is he so cocky about his provably ungrounded but regressive view.