There is no climate of shame about fabulously undeserved income

What determines the culture of the times? Politicians have their part to play. The 1980s were famously crystallised in one line from the movie Wall Street: "Greed is good." Mrs Thatcher's boys in red braces were minting it in the City when padded shoulders symbolised padded wallets and all that glisters included solid-gold handbag chains. Twenty years on, the big hair has gone but greed is still pretty good. In eight Labour years no one has challenged it. Certainly not the Blairs.

Cherie Blair just earned in an hour and a half almost as much as it takes someone in a year to join the top tax bracket; 88% of the population earns less in a year than she did for that brief appearance. Billed in Washington as the "Trailblazing First Lady of Downing Street", she pocketed £30,000 and was reportedly indignant at suggestions that she donate money earned only as prime minister's wife. No one is buying hot tickets to hear plain Ms Booth QC.

True, PM's wife is a dreadful role and she may feel she deserves compensation. She has suffered relentless ridicule and harassment by a Tory press printing the ugliest pictures and mocking her clothes, friends, legal career, religion and anything they can invent to turn her into a ditzy Lady Macbeth. She gets all the right's loathing of non-doormat political women on the left. I defended her when, owning no property, she bought a couple of flats worth a fraction of the value of the homes owned by the journalists attacking her. (Paul Dacre, editor of the Mail, "earns" £1.6m a year.)

But none of that justifies taking this money. No rules have been broken and she is not a public employee. But on top of her £100,000 Australian tour it is unsavoury, to put it mildly. She could at least have waited until she and her husband have left No 10; this has raised shudders as to what spoils her husband may seek when they do go.

So what happened to the Blairs to let them do this without blushing? Where is the moral compass that points to "no"? If that's on the blink then where is the gut political instinct that says "no"? The same question, very sadly, has to be asked of Neil Kinnock too. Even though the EU commission has approved the job, it still tarnishes his reputation to move from chief sleaze-buster and transport commissioner straight to taking £50,000 a year to lobby the commission on behalf of shipping interests. He doesn't need the money: he was paid £142,000 a year with a retirement package of £270,000 and an indexed pension of £63,900. His wife earns a lot as an MEP, so what is it for? Is it really worth the loss of dignity? He could afford to devote his considerable energy, skill and charm to good works - and respect is priceless.

Something happens to people when they spend too long in the upper stratosphere of wealth and power. They easily forget what's normal. They think they are owed equality with the richest people they meet; they soon feel poor in comparison. A sense that they "deserve" more chases away cautionary reminders of how most other people live. In this most unequal of EU countries the rich, soaring ever higher above the rest, live in a bubble where they know nothing of ordinary life (let alone how the poor live). They inhabit a hermetically sealed world where "everyone" drives in air-conditioned isolation from gated community to private office car park, with children driven to private school, family never using a public park, bus or tube, let alone the NHS, a library or swimming pool, meeting none but others like them. These mightily powerful citizens no longer belong to the society they control, excluding themselves at the top as surely as others are forcibly excluded at the bottom from the civic life of the majority.

If politicians themselves enter that hyper-world, their feet leaving the ground, this social segregation gets dangerous. After eight long years in the enforced cocoon of No 10, it is hardly surprising if the Blairs have lost touch. (Travelling with Tony Blair in his car through London is a bizarre experience: does he remember life before outriders stopped every traffic light at every junction so he could speed through in minutes what usually takes an hour?) Ideologically, Tony Blair always denounced the politics of envy: he had "no problem" with the successful earning whatever they could lay their hands on. Somewhat patronisingly, some observers suggest that because Cherie was brought up in Liverpudlian penury and Tony saw his own father struggle up from nowhere, they feel entitled to grasp whatever comes within their reach. But this officer-class analysis implies that those born to wealth behave better, when in fact denizens of Eton-to-merchant-bank boardrooms are the most shamelessly, effortlessly greedy of the lot.

A reminder: on terra firma the median UK income is £21,000. (That is the sum at which half the population earns more and half earns less.) The average is much higher - but our grossly unequal distribution of incomes makes an average a meaningless blur between a hospital cleaner and Paul Dacre. Maybe the government preens itself on the latest Eurostat figures that put the UK top of the EU earnings league, but forget it. The proportion of people in Britain earning less than the average has risen steadily in the last decade to around two thirds.

How do you define fair pay? Whose labour is worth most? A league table of public respect would find us journalists grossly overpaid. Reward has no connection with value: it is a tissue of tradition and power with surprisingly little genuine market testing. There is no reason why top CEOs earn more than their weight in gold: the Work Foundation finds no hot market for them; most are home-grown in their companies, with no global market eager to poach them.

If politics cannot ordain some divine pay scale, at least politicians can set a cultural tone. They can denounce excess and talk of fairness. They can name and shame the greedy while praising those in public service, mainly paid much less. Since Gordon Brown put a £1.4m cap on the sum the rich can put into their pensions tax-free, the squeals of the high earners defies belief, yet £1.4m is an unimaginably huge pension pot for virtually everyone else.

There is no climate of shame about fabulously undeserved wealth and income. The Blair years have tried to create a social model that deliberately eschews any disapproval of "success" as measured in raw excess. The language of responsibilities applies to the poor, not the rich - though the poorest fifth of the people (who pay a higher proportion in tax) give 3% of their income to charity while the richest fifth (who pay proportionately less tax) donate only 1%.

It is this same lack of embarrassment that makes Cherie Blair's Washington earnings alarming. Why not? Everyone does it? Greed is good. Yet it saps morale, fractures social cohesion, melts away trust and spreads discontent. Once he is free to speak, we wait to see if Gordon Brown, the rigorous and prudent old son of the manse, will bring back some old-fashioned disapproval of the dislocation between value and reward.

polly.toynbee@guardian.co.uk