Social mobility versus keeping the middle class satisfied?

Gerry O’Quigley provides me with the opportunity to cut back what is likely to be a crucial issue for both government and opposition in the Republic’s next election. From the midterm elections in the US to Blair’s long trek into middle England it is clear to most political pragmatists that if you don’t attract the middle classes, you don’t get political power (in English speaking western democracies at least). But, says Noel Whelan, what if those policies don’t make long term sense (subs needed)?As anyone who has read The Pope’s Children can affirm, “the middle classes in Ireland have never had it so good”. But, he argues, governments seem transfixed when faced with adjusting government largesse in favour of creating greater social mobility. For instance, in education:

They no longer pay third-level fees. The question of whether the ending of third-level fees has or has not improved access to college for those from more disadvantaged areas is still a matter of some dispute.

However, what cannot be disputed is that abolition of third-level fees has dramatically increased the access of middle-class kids to private secondary schools and grind colleges. Wealthier parents have now been able to divert the resources they might otherwise have been spending on college fees to buying an advantage for their children even earlier in the education cycle.

The intensity of the opposition which the then minister for education, Noel Dempsey, faced both within his own party and from the Opposition benches when he floated the idea of re-introducing third-level fees in 2003 and using the money instead to improve grants to students from lower-income households illustrates the extent of the hold the middle classes and their concerns currently have over Irish politics. The middle classes are also the people benefiting most from the hundreds of thousands of euro now being paid out of the Government-subsidised SSIA accounts.

Not only are they most likely to have had the disposable income to put into these saving accounts, but the scheme was structured in such a way that the more money one put into the SSIA, the larger the State subsidy one gets when it pays out.

In conclusion:

In their tax policies, the Progressive Democrats are set to promise reductions in stamp duty which will benefit the middle classes most. They are even promising a further reduction in the already-very-low top rate of income tax.

Individually, it may be possible to justify each of these promises on some or other objective ground, but the cumulative effect is that giving these State-funded gifts to everyone irrespective of income means many in the middle classes can end up creaming it, while in reality it is the lower classes who are left coping.

The only way to really tackle inequality is to redistribute income. There are only two ways to do that. One is through the tax system. The other is through targeting public expenditure at those most in need.

Our income tax system can only achieve minimal redistribution because it is a low-tax, two-rate system. Meanwhile, all the political parties are reluctant to target our benefits towards those who need them most. The political parties will have to get more courageous if we are ever to tackle the additional inequalities which have come with our newfound prosperity.