capital’ continues to operate (Friedman and Laurison, 2018). Deindustrialization, the automation and precarity of much work and the effects of the 2008 crisis on incomes, savings and debt have led to a considerable deterioration in the generation of new opportunities. Upward mobility is thus only feasible if there is equivalent downward mobility, which is limited given that family advantages among the better off are generally preserved.
The implications for social policy are that the most commonly accepted social mobility policy – increasing educational opportunity – only works at the margins and mostly simply increases the effort needed to reach the same point as one’s predecessors. More radical options then require a focus on limiting privileges. Here again, while educational privileges offer obvious targets, to go further implies the reduction of economic advantage. With respect to relationships between the generations, the taxation of the transfer of wealth such as inheritance tax is practised to a modest degree in various countries in the world. Scheve and Stasavage, in Taxing the Rich (2016), show that high rates of inheritance tax, like high rates of income tax on high incomes, were only developed across the period of very high state expenditure occasioned by war in the twentieth century. Since then there have been reductions in inheritance tax, including its abolition in Australia, New Zealand, Austria and (more surprisingly given its Gini coefficient) Sweden.
The discussion in this chapter has considered data on the distribution of both income (measured in terms of money accrued in a specific period) and wealth (measured in terms of the longer-run holding of assets). Clearly in any consideration of inherited advantage the latter is important. Perhaps the most important contribution of Piketty’s (2014) path-breaking study of inequality is that he shows that in the countries he studied – France, the UK and the US – in the nineteenth century there was a steady increase in inequality seen in terms of variations in the holding of wealth. The wars of the twentieth century, and some of the policies that followed after them (particularly immediately after 1945), led to some equalization. Then, as noted earlier with respect to income inequality, the last years of the twentieth century and all of the twenty-first (so far) saw a reversal of that equalization, and the contemporary economic climate is a period in which wealth inequalities are particularly likely to grow.
While the general implications of Piketty’s analysis are evident, it is useful to draw attention to an aspect of the growth of wealth with specific social policy implications. While the increasing wealth of the super-rich is most significant (the top 1 per cent or 0.1 per cent, for example), there has been some spread of wealth among a much larger number of the better off, taking the form of wealth invested in housing. Lowe (2011, p. 238) sees here a clear
stratification effect … a major intergenerational rift in most of the home owning nations. House price increases, the famine of mortgages arising from the credit crunch and the differential layering in of housing wealth have all impacted to create disparities and fractures in the housing landscape with major long-term impact.
The implication is that a ‘property owning democracy’ is also likely to be an inequality perpetuating society. Lowe’s analysis is particularly applicable to countries such as the UK and the US where home ownership is the dominant model, but is also increasingly relevant for countries such as Denmark where the ‘social ownership’ model is under threat. Ultimately an underlying policy problematic has been greatly intensified by the financialization of property accumulation through mortgages, which sets the benefits of housing asset ownership for those on the lowest incomes against the power of financial elites to maintain their position (see Chapter 8). The development has implications not just for social mobility but also for the other two topics to be discussed in this section.
The two issues – inequality between young and old and inequality between the generations – are linked in that a realistic analysis of the former requires a recognition of the significance of changes over time. In the nineteenth-century studies of poverty in the UK carried out by Seebohm Rowntree, much was made of a life cycle effect. Working-class adults able to participate in the labour force enjoyed a period of relatively good income (stressing the ‘relative’ aspect here) while single. Starting a family had a significant downward impact upon resources. Eventually, once children became earners, the late middle aged might again enter a period of relative prosperity before retirement brought a return to poverty (see Rowntree, 2000). The identification of this life cycle effect contributed to arguments for establishing child benefits and for state-guaranteed pensions in the early twentieth century. Its emphasis supports redistribution via social policies within the life course and echoes the important point made by Barr (2001) that, in general, the welfare state can be regarded as a ‘piggy bank’ in the sense that much of what is individually contributed while of working age is reclaimed over a whole lifetime.
There may be little to cause concern here unless processes of economic or demographic change occur that alter the impact of state interventions. It is these that have, not surprisingly, occurred, giving new complexions to the relationships between the generations. Generalizing developments requires caution, but across the nations of the world a long view reveals patterns of changing advantages and disadvantages. It may be noted, for example, that the nations of Western Europe experienced successively: high unemployment before the Second World War, low unemployment but with deprivations associated with conflict during the war, then a period of low unemployment accompanied by major advances in social policies for around forty years after the war, followed by a succession of economic problems involving high unemployment and/or insecure employment and the adoption of austerity measures by governments. This implies very different life experiences across that period, embodying advantages (opportunities to save and make house purchases, for example) and disadvantages (difficulties in getting into education and employment, for example) that have long-term effects.
War between or within nations is a significant factor in shaping life chances, since it is accompanied by general deprivation of welfare, and this is a feature that continues to characterize many countries in the global South in the 2020s. The current period of austerity too, is likely to have significant scarring effects on the life chances of young people whose education and school-to-work transitions have coincided with reductions in public investment. It may be possible therefore, and notwithstanding structural sources of inequality, that there are ‘lucky’ and ‘unlucky’ generations. These variations bring opportunities for political defenders of the status quo to emphasize life chance differences that distract attention from wider sources of social problems and undermine general solidarity.2
In the Western European context it is clear that the treatment of older people presents particular issues. As pension policies developed, the alleviation of widespread poverty among older people became a high political priority, and in the early implementation of austerity, the protection of pension incomes was prioritized as non-discretionary spending. In the context of a dramatic increase in longevity, and in societies where birth rates are low and therefore age ratios across society are changing, unfunded transfers make steadily increasing demands upon government budgets, and thus potentially on a falling number of taxpayers. The OECD, in its report Preventing Ageing Unequally (2017f), for example, sets out both the cumulative effects of inequality over the life course and the implications of contemporary trends of rising inequality and ageing populations, both in the advanced economies and in countries such as Brazil and China. While it is risky to make predictions of future patterns, given the evidence on cumulative inequalities and the scarring effects of unemployment and other social and economic disadvantages, it is safe to assume that younger generations now face greater risks of income, health and age-related inequality than their parents’ and grandparents’ generations, complicated by differences in asset ownership (particularly housing). This adds further dimensions to social analysis and policy challenges to which subsequent chapters return.
Returning to the question of unacceptable inequality, there is an extensive debate about poverty, a concept used to identify levels of income and structures of relations that are deemed to be unacceptable. These issues are subject to analysis using a variety of approaches, some of them rooted in philosophy and ethics, others identifying