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 the consequences of excessive inequality. In considering policies to tackle inequality, discussion has been limited here for two reasons. One of these is that, while the argument here adopts a stance that social and economic policy issues cannot be simply disentangled, much of the thrust of policies to tackle inequality must involve economic developments. Economic development itself, as suggested earlier, does not result in reduced inequality. On the contrary, as international organizations from the World Economic Forum to the UN now explicitly recognize, economic growth is severely hampered by inequalities that restrict people’s opportunities to participate in and contribute to social, political and economic life. The social commentary we can provide here is confined to pointing out the benefits and/or consequences that follow from approaches to inequality reduction based upon stimulating growth. The second is simply that later chapters contain more detailed discussions of some of the key policy areas and specific interventions within these. In addressing policy issues a distinction is again made between policies to address inequalities within countries, and policies to address those between countries, while noting connections between the two.
When looking within individual nations, the distinction between ‘gross’ income (before the application of taxation or provision of benefits) and ‘net’ income is important. Much of the European social policy discourse on this was developed in the era of full employment and (often) relatively strong trade unions. This led to an approach summed up by the kinds of measures, advocated in the Beveridge Report, concerned with the needs of those temporarily or permanently outside the labour market. In the UK the path-breaking work of Abel-Smith and Townsend (1965), identifying poverty among families where there was employment on the part of at least one member, started to change the terms of discussion. Yet even then, the ensuing debate about poverty tended to focus on children, with ‘child benefit’ as the crucial remedial measure.
In the UK in the 1970s means-tested benefits for those in work began to be developed. A consensus dating from the 1832 poor law reforms, that it was undesirable for the state to subsidize wages, began to be challenged. This has led to the development of an extensive (and confusing) system of benefits to subsidize low wages. The latest radical alternative to existing measures to combat poverty, noted earlier in the chapter – universal basic income – does not really depart from an approach that sees public action as focusing on issues outside the labour market.
But there are other policies, in many advanced economies including the UK, that address the problem of low wages by focusing on gross income: laws that specify minimum wages. These have the weakness that they target the very bottom of the wage distribution, and do not address the equally problematic issue of excessive earnings at the top (for wider discussion see Orton and Rowlingson, 2007). There are other policies of wider application that address themselves to many aspects of the contractual deals between employers and workers. Significantly, they have featured strongly in European Union social policies. Approaches to the reduction of inequality concerned with gross incomes inevitably rest upon the extent to which unemployment (or the related issues of part-time and insecure employment) can be avoided. Notably here, variations exist in the extent to which social goals are identified in discussions of economic policy. In much of the debate between advocates of neoliberal ‘laissez faire’ and Keynesian ‘demand management’ policies in the last years of the twentieth century, a key difference was between the argument, by the former, that minimization of inflation should be the dominant policy goal and the argument that, as in the early post-Second World War years, the central concern should be to aim for full employment. In the twenty-first century so far, high inflation has not been experienced in most industrialized countries while the definition of ‘full employment’ seems to have been adjusted downward in orthodox economic analysis. However, since the global economic crisis of 2008 the dominant emphasis on ‘austerity’ with respect to government policies has replaced the concern about inflation as an argument against active policies to promote employment (see Farnsworth and Irving, 2015; McBride et al., 2015).
However,
