THE BEST KNOWN SOCCER PLAYER IN ENGLAND IN RECENT YEARS HAS been a man called Wayne Rooney. When I started writing the book he still played for Manchester United, had just been replaced as captain of the England team and had scored 53 goals, a record number, for the national side. He has since retired from international football, been transferred back to his boyhood club, Everton, and at the time of writing seems likely to be transferred to the United States. Once when we were both in a bar in the Lowry Hotel in Manchester, he apparently wanted to swap his modern Aston Martin for my classic one and sent a minion to talk to me about it. The next person who wanted my classic Aston had no intention of offering something in return and simply stole it.
Wayne Rooney was paid £13.5 million in 2015.1 His predecessor as England’s top goal scorer was another Manchester United soccer player, Bobby (now Sir Bobby) Charlton (a genuine soccer hero and perhaps the biggest star of the 1966 England team who won soccer’s World Cup, the only time that the England national team has ever won a major international competition), who scored 49 goals and held England’s international goal scoring record for 45 years.2
Sir Bobby’s annual salary in 19723 when he was close to the peak of his career was only £15,000. Even after allowing for inflation Wayne Rooney’s salary in 2015 was four times as much as the whole Manchester United squad was paid in the late 1960s and early 70s.4
Sir Bobby earned twice the average pay for the top league and eight times the average pay of players in the lower leagues. Wayne Rooney earned ten times the average pay for the top league and 450 times the pay of players in the lower leagues.
So, relative to the players in the lower leagues, Wayne Rooney earned a staggering 53 times more relatively than Sir Bobby did just over 40 years earlier for doing essentially the same job.
This single figure illustrates the extent to which pay inequality in the football world has increased in the past half century.
The reasons why this has happened are widely known – UK football has globalised and technology means that it can now be broadcast instantaneously throughout the world. I have been at dinner parties in Hong Kong, Kuala Lumpur and Dubai, lunch parties in Mexico City and breakfasts in Sydney which have been interrupted by the English Premier League.
As a result, Manchester United’s revenue in 2015 (not a particularly good season for the club – they finished only fifth in the Premier League, outside the top four places which entail automatic qualification for the next season’s European Champions League) was 70 times higher in real terms than its revenue in 1969. The gap between Wayne Rooney’s real earnings and those of Sir Bobby more or less entirely reflects the club’s increased revenue.
The spectacular increase in inequality in soccer isn’t just important because it illustrates a particular trend graphically. It is also useful because it shows how the rise in inequality in this particular sector has been driven mainly by underlying economic factors rather than the exploitation suggested by Piketty. The rise in pay of top soccer players matches the rise in earnings of the top soccer clubs. Television technology has been behind this, enabling soccer matches to be seen around the world, while globalisation has in effect poured fuel on the flames by massively increasing global television revenues for the major clubs.
But football is merely an extreme case of a phenomenon that has been widening the pay gap in most Western economies from around 1980 until the financial crash in 2008. The same trends – globalisation with some help from technology – have affected most sectors. For the UK as a whole the share of total incomes (pre-tax) received by the top 1% of income earners rose from an estimated 7% in 1975 to 16% in 2008 before falling back to 13% in 2014 (see Table 1). In the US the rise has been starker – from 6% to 18% over the same period. Even in Germany, with a more egalitarian tradition and a strong education system, the rise has been of a similar order of magnitude. The only major economies with little rise in income disparities have been Japan, France and Italy. It comes as no surprise to discover that these have been the slowest growing of the G7 economies.
The financial crash of 2007-09 marked the end of this process, at least temporarily. In the UK the share of the top 1% has fallen back to its lowest level for nearly 20 years. Even in the US the share is lower than it was ten years ago.
Table 1. Shares of income earned by the top 1%
| China | France | Germany | India | Italy | UK | US | |
| 1980 | 6.4% | 8.2% | 10.6% | 7.3% | 8.4% | 10.7% | |
| 1981 | 6.7% | 8.2% | 6.7% | 8.3% | 11.1% | ||
| 1982 | 6.9% | 7.5% | 6.1% | 8.2% | 11.3% | ||
| 1983 | 7.1% | 7.3% | 9.8% | 10.3% | 8.2% | 11.5% | |
| 1984 | 7.5% | 7.5% | 8.9% | 8.3% | 12.5% | ||
| 1985 | 8.0% | 7.7% | 10.5% | 8.4% | 12.6% | ||
| 1986 | 8.0% | 8.2% | 10.2% | 10.8% | 8.9% | 12.2% | |
| 1987 | 7.9% | 9.0% | 10.3% | 10.3% | 13.3% | ||
| 1988 | 8.0% | 9.2% | 11.1% | 10.6% | 14.9% | ||
| 1989 | 8.2% | 9.5% | 11.4% | 11.0% | 11.9% | 14.5% | |
| 1990 | 8.1% | 9.3% | 10.5% | 13.0% | 9.8% | 14.5% | |
| 1991 | 8.3% | 9.1% | 10.2% | 12.1% | 10.3% | 13.9% | |
| 1992 | 8.8% | 8.6% | 9.5% | 10.0% | 8.4% | 9.9% | 15.0% |
| 1993 | 9.2% | 9.1% | 12.5% | 8.6% | 10.4% | 14.6% | |
| 1994 | 9.4% | 9.2% | 12.4% | 8.6% | 10.6% | 14.7% | |
| 1995 | 9.3% | 9.2% | 8.2% | 13.0% | 8.7% | 10.7% | 15.3% |
| 1996 | 9.6% | 10.0% | 13.2% | 8.9% | 11.9% | 16.0% | |
| 1997 | 9.6% | 10.4% | 13.8% | 8.4% | 12.1% | 16.6% | |
| 1998 | 9.8% | 10.7% | 11.8% | 14.4% | 8.5% | 12.5% | 16.9% |
| 1999 | 9.9% | 10.6% | 14.7% | 8.7% | 13.2% | 17.7% | |
| 2000 | 10.4% | 11.0% | 15.1% | 9.1% | 13.5% | 18.3% | |
| 2001 | 10.9% | 11.3% | 11.4% | 15.9% | 9.4% | 13.4% | 17.3% |
| 2002 | 12.5% | 10.9% | 11.1% | 16.7% | 9.5% | 13.0% | 17.1% |
| 2003 | 13.1% | 11.4% | 10.5% | 17.5% | 9.8% | 13.2% | 17.2% |
| 2004 | 13.8% | 11.6% | 11.1% | 18.4% | 10.5% | 13.3% | 18.3% |
| 2005 | 14.2% | 11.5% | 12.9% | 19.3% | 11.0% | 14.2% | 19.4% |
| 2006 | 14.8% | 11.2% | 13.2% | 19.7% | 11.3% | 14.8% | 20.1% |
| 2007 | 15.3% | 11.7% | 14.0% | 20.1% | 11.3% | 15.4% | 19.9% |
| 2008 | 15.2% | 11.6% | 14.5% | 20.4% | 10.9% | 15.4% | 19.5% |
| 2009 | 15.4% | 10.2% | 13.2% | 20.8% | 10.4% | 15.4% | 18.5% |
| 2010 | 15.1% | 10.8% | 13.1% | 21.2% | 10.4% | 12.5% | 19.8% |
| 2011 | 14.6% | 11.5% | 13.1% | 21.3% | 12.9% | 19.6% | |
| 2012 | 13.8% | 10.4% | 13.0% | 21.5% | 12.7% | 20.8% | |
| 2013 | 13.8% | 10.8% | 13.2% | 21.7% | 14.5% | 19.6% | |
| 2014 | 13.7% | 10.8% | 13.9% | 20.2% | |||
| 2015 | 13.9% |
Source: World Inequality Database downloaded 5 June 2018
Another example of rising inequality can be seen in the number of billionaires in the world. In 2000 there were 470. In 2008, just before the impact of the financial crash, the number had more than doubled to 1,125 but fell back the next year to 793. In 2015 there were 1,826 billionaires in the world, according to the respected Forbes international database, although the number plateaued in 2016. In 2017, partly as a result of the impact of loose monetary policy on asset values, the number of billionaires rose to 2,043, the biggest jump in the 30-year history of the list.
In world cities such as London, Paris, New York, Los Angeles, Dubai, Singapore and Hong Kong they are obvious. Flash men (mainly) accompanied by women who look a few years (at least) younger. Noisy sports cars. They eat in the most expensive restaurants. They dance in the most exclusive clubs. In the northern hemisphere summer they can be seen on their yachts cruising into marinas in Capri, Portofino, St Tropez, Marbella, Sardinia’s Porto Cervo and Monte Carlo.
It is not only the number of billionaires that has increased. A large number of studies show how income inequality increased in many different countries and regions before the financial crisis. And the number of super-rich, after falling back, rebounded to higher levels than ever.
The contention of this book is that economic inequality is going to be the major economic challenge not only for this generation but also for the next, and quite likely further ahead.
It matters hugely whether we apply the right solutions or the wrong ones. There are plenty of snake oil salesmen out there peddling ideas that at best would make both inequality and poverty worse. At worst some of these ideas could destroy what we think of as Western civilisation. Indeed a major new book released in the US while this book was being edited makes precisely the same warning.5 It is important, in our worry about what is happening, to be sufficiently knowledgeable and hardheaded not to fall prey to such salesmen.