MPS need to be saved from themselves.

How did they allow the story of their £20,000 a year pay claim to emerge in the week they voted to cut unemployment benefits in real terms for the first time since the 1930s? Nothing better illustrates the extraordinary world that politicians inhabit, where a salary that is greater than 95% of the working population's is considered too little to live on – even though they get their second home allowances and expenses.

Just to recap: claimants are to have a 1% cap placed on benefits increases as a result of last week's vote – that's well below the inflation rate. Public sector workers get 1% too. But MPs want 32%? I don't think so. MPs are feeling the pinch because they can no longer put in those expenses claims that used to bolster their incomes before the scandal in 2010. They just can't manage on the miserable stipend of £66,000. MPs believe that they should be paid "the rate for the job", and they are falling far behind comparable professions like doctors and senior civil servants.

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Set aside the dubious assertion that the Honourable Member for Numpty-on-Sea is actually worth as much as a doctor, who has to go through six years of training, and consider how their constituents would react if MPs got a pay increase of this scale. Median earnings in this country are not much more than £26,000 a year, which means that half of the working population earns less than that. Five million people are working for less than the minimum wage, according to research by the Resolution Foundation. No, I don't understand how that is allowed to happen either, but it does. We live in a low-wage economy, and wages are getting lower year by year as pay increases lag behind inflation.

We all feel that we are underpaid – even idiots like the French film actor, Gerard Depardieu, who said he would emigrate rather than pay his taxes. We live in a culture of peevish plutocracy, where utterly undistinguished and often incompetent accountants can end up being paid millions if they happen to be called Fred Goodwin and are put in charge of a bank.

We have created a society where everyone believes that everyone else is on the take: all those skiving benefit claimants lying in bed with the blinds drawn while we hard-working "strivers" go out to work.

But who really believes that claimants are unemployed out of choice? I don't know how anyone lives on £71 Jobseeker's Allowance – less if they are under 25. Would anyone live on that if they could possibly avoid it? Yes, I know: housing benefit is a national scandal – but that's because the price of housing is a national scandal, kept aloft by money-printing and near-zero interest rates. The money doesn't go to the claimant.

Pensioners are now being targeted for those supposedly generous universal benefits enjoyed by rich oldies who don't need them. As if nicking granny's bus pass will solve the economic crisis. How many rich pensioners use buses anyway? The economy is slipping back into recession – a triple dip – in 2013, and the best we can do is snatch the winter fuel allowance

But what many politicians say is that they are responding to public demand, that their constituents tell them they think the benefits culture is out of control: the "something-for-nothing-society". Strangely, people are much less sympathetic towards those out of work when there are no jobs than they are when there is no shortage of them.

No-one is quite sure why this is, though clearly Tory propaganda and press coverage has a lot to do with it. That cap on benefits at £25,000 announced by David Cameron at the Tory conference, was clever because it suggested people on welfare were all on near-average earnings when, of course, only a tiny handful are receiving anything like this.

Why is this hostility so evident in Britain, and not in countries like Norway and Denmark? Of course, there are people who question the Nordic model of social democracy, but they don't pose any significant political challenge there. This is largely because these countries are so economically successful.

The conventional wisdom in neoliberal Britain is that welfare is unaffordable, a brake on the economy, a "luxury" we cannot afford. In fact there is very little correlation between the size of the welfare bill and the performance of the economy. Denmark is one of the highest-taxed, highest-welfare countries in Europe, yet it sailed through the economic crisis. Welfare benefits are much more generous in Germany than Britain.

Part of the problem is immigration. Suspicion, encouraged by press reports, that foreigners are somehow taking advantage of welfare, is very corrosive in England. Size is another factor.

In multinational states like the UK, there is suspicion that the Scots are milking the Barnett formula, and getting free prescriptions and free university tuition at English taxpayers' expense. This isn't the case, of course, because Scotland receives a block grant and has to make choices within a fixed sum.

It may be that smaller societies are simply more cohesive. In Norway, I was struck by how many people feel that their high income taxes are actually being used to their benefit, in roads, schools, social housing, hospitals. People seem to take some pride in seeing their taxes being used to make everyone's lives better. This is very different to the atmosphere in the UK where people think the Government is "taking away" their hard-earned cash and wasting it.

But in the end I think the main reason we are, as a society, so suspicious of welfare claimants is that we believe in the cult of the "wealth creator", that the only way to prosperity is through individual material advancement and the tolerance of extreme inequalities of wealth.

We live in a cliff-edge society, where to lose your job is to be plunged into extreme financial hardship within weeks.

Most families in Britain are deep in debt, and struggling to cope with rising food bills. Of course we want to blame someone – and if there are people in your street who seem to be getting by not working, you blame them.

Meanwhile, it's not all doom and gloom. Sales of Rolls-Royce cars, minimum price £198,000, have broken all records this year. Britain is clearly on the mend.