I have been hearing a lot lately about wealth inequality. You probably have too. People like Gary Stevenson, a former City trader who now campaigns on this stuff, says the gap between the very rich and everyone else is getting dangerous. His answer is a wealth tax. Take money from those at the top and share it out.

I get it. I really do.

The trouble is, the evidence says it does not really work. And the reason why is something I stumbled across this week that honestly blew my mind. Bear with me because it sounds complicated but it is not.

It is called econophysics. Which is basically what happens when physicists get interested in money. They used the same maths they use to track how energy moves between particles and applied it to how money moves between people. And what they found was extraordinary.

They called it the Yard Sale Model. Here is the idea. Think of two people going to the same shop and buying the same thing. One has £100 in their account. The other has £10,000. The purchase costs them both £20. For the person with £100, that is a fifth of everything they have. For the person with £10,000, it barely registers.

Scale that up to every purchase, every transaction, every day, across an entire economy, for years. The person with less is always staking a bigger slice of what they have. The person with more is barely touched. Even when everything is completely fair, with no cheating and no exploitation, wealth drifts upward. Always. That is what the maths shows.

The bit that really got me. If you gave everyone in the country exactly the same amount of money tomorrow, without changing anything else, the research says the same concentration of wealth would return. The same pattern. Because the structure that creates it is still there.

So a one off wealth tax, as satisfying as it sounds, does not fix it. The problem is not something that happened in the past. It is happening all the time, in every transaction, every single day.

Which is where Universal Basic Income comes in.

UBI is simple. Every person in the country gets a regular payment from the government. No forms. No conditions. Not means tested. It just arrives every month because you live here. Whether you are working or not, rich or not. Everyone gets it.

Countries have been trying this. Finland gave 2,000 unemployed people around £490 a month, no strings, for two years. Did they stop bothering? No. They were less stressed, happier, and slightly more likely to be in work by the end than people who got nothing. In Stockton in California, people given $500 a month actually got more full time jobs. Because having a bit of security meant they could take time to find something decent rather than taking anything out of desperation. In Kenya a charity has been running a twelve year trial with over 21,000 people and whole communities have benefited, not just the people receiving the money. Wales has been running its own trial since 2022. England is planning its first one now.

You might be surprised to hear that versions of this already exist. Child Benefit is a universal payment. The State Pension is basically a UBI for over 66s. Alaska has paid every resident an annual dividend from its oil money for over forty years.

The argument against is mainly the cost. A UK wide scheme could cost anywhere between £45 billion and £200 billion a year depending on how much each person gets. That is serious money and someone has to pay for it.

Here is the thing though. UBI is not the same as a wealth tax. A wealth tax tries to correct the problem once. UBI works against it continuously, every month, permanently. Which is exactly what you need when the problem never stops.

And yet. I have known people who earn considerably more than me who have far less to show for it. And people on more modest incomes who have built something solid and real over time. The difference is rarely the amount coming in. It is what they do with it. The habits they have built. The beliefs they carry about what they deserve. The way they manage money day to day.

So UBI, interesting as it is, is only part of the answer. The econophysics tells us the structural problem is real and relentless. And the other part, the part I work on every day with the people I coach, is just as real. The beliefs we have inherited about money. The sense of self worth that says we do or do not deserve financial security. The habits and skills that either build something over time or gradually drain it away.

A floor beneath everyone matters enormously. What you build on top of it matters just as much.

fannysnaith.com