RG Wilkinson and KE Pickett. Spirit Level,The: Why Equality Is Better For Everyone
Penguin Books. ISBN 978-0-141-03236-8 pp 349
It seems obvious that the way to improve the lot of most people in a country is to increase its national wealth. Some will do better out of this than others but everyone will gain something; a rising tide lifts all the boats. Certainly, if a country is really unable to provide its people with the basics like food, clean water, sanitation, health care and education, things are unlikely to get better until there are the resources to put this right.
In The Spirit Level [1], however, Richard Wilkinson and Kate Pickett show that this works only until there is enough to provide everyone with the means to live comfortably. Beyond that point, making the average person better off financially does not improve their quality of life. In countries at the level of Western Europe and North America, there is little or no correlation between national average income and a whole collection of indices of well-being: health, social problems in general, child happiness, the incidence of mental illness, life expectancy, the murder rate, obesity both in adults and in children, teenage pregnancy rates, average scores in mathematics and literacy tests, and more. There are, on the other hand, significant correlations between the same indices and income inequality, as measured by the widely accepted Gini index [2]. They find the same picture by comparing either 23 of the richest countries in the world or the 50 states of the US. What is more, the better indices of well-being do not merely reflect improvements in the lot of the poorest; the higher income groups also do better when the country or state where they live is more equal.
In all the comparisons, the US stands out as the country with the highest national average income and at the same time both the greatest inequality (apart from Singapore) and the worst scores on most social measures. But it’s not just the US; if you omit it from the calculations on the grounds of ‘exceptionalism’ (the view held mostly by Americans that the US is such a very special country that it must not be compared with any other) you get pretty much the same correlations. Put another way, if you work out the regression line using the other 22 wealthy countries, you find the US to be about where you would expect it to be.
The usual arguments for reducing inequality have to do with its effect on the poor. When the Bible says “You shall open wide your hand to your brother, to the needy and to the poor in your land,” (Deuteronomy 15:11) it is telling the better off to give some of what they have to help those with less. When Marx wrote, “Workers of the world, unite! You have nothing to lose but your chains,” he was concerned with the plight of the proletariat, not the well-being of the bourgeoisie.
Wilkinson and Pickett suggest something quite different. Those of us who are relatively well off should support measures that reduce inequality not because they are good for the poor (though they are) but because they are good for the rest of us too. It is a matter not of charity but of enlightened self-interest.
As you would expect, The Spirit Level has been sharply criticised by many writers, mostly in right wing media and think tanks. Some have challenged details of how the data were collected and analysed, but there are so many data and the conclusions are so robust that those objections are readily refuted.
One common line of attack is that we need inequality to drive economic growth. If we reduce incentives for innovation and entrepreneurism, then surely the economy will suffer and everyone, rich or poor, will be worse off. This is largely contradicted by the evidence at the heart of the book. The graphs show that countries with higher national per capita incomes do not do better on the well-being scales, and so give little or no support to the claim that increasing the national income without decreasing inequality would help the poor or anyone else on these important issues. Remember, we are looking only at countries that already have enough money to provide everyone with a reasonable standard of living if they chose to.
Besides, the idea that increased national wealth is like the incoming tide that raises all the boats is already falling into disrepute. This is especially well documented in Thomas Piketty’s Capital in the Twenty-first Century [3], but it has been well known for a long time that despite the great growth in the US economy since 1970, the median income (adjusted for inflation) of the lowest 40% has actually fallen since then. In 1970, the top 1% took 9% of the national income in the US, but by 2000-2010 they were taking 20%. A lot of the boats are firmly stuck to the bottom and look likely to stay there.
It might well be true that if there were no scope at all for inequality, innovation and growth would stagnate. There is, however, no evidence that this requires anything like the degree of inequality we observe in countries like the US. The US and the UK pay CEOs very much higher rewards than countries in Europe and Japan, but there is no evidence that they have more successful businesses and faster growing economies as a result. A recent report by members of the Research Department of the International Monetary Fund (IMF) concluded that inequality tends to reduce the pace and durability of growth [4].
Another objection is that the conclusions of The Spirit Level are based on correlations, when it is well known that correlation does not prove cause and effect. A statistically significant correlation between A and B might mean that A is the cause of B. But A and B might have a common cause, or B might be the cause of A. It could even be a coincidence, if, for example, we suspect that the data have been cherry-picked.
A significant correlation does not indeed prove that A causes B. It is, however, evidence in favour of that hypothesis. It establishes what a lawyer would call a prima facie case. And when we find similar correlations between A on the one hand and a whole collection of related variables B1, B2, B3 and so forth, on the other, we can pretty much rule out cherry-picking. As for the direction of causation, it is highly implausible that increased obesity and homicide rates (to choose but two) are important causes of inequality. The onus is on those who insist that inequality is not an important contributor to these serious social problems to provide plausible alternative explanations. So far, they have not suggested any.
Why does inequality have a negative effect even on those who have incomes at or above the median for their country? If anything, you would expect it to be their advantage. Wilkinson and Pickett devote much of their book to trying to answer this question. Many of their accounts involve the idea that living in a very inegalitarian society is highly stressful because you are always trying to climb up the ladder or at least hang on to what you already have. And stress has indeed been shown to be at the root of many problems. I find such arguments convincing; I have to say I am less impressed by their occasional appeals to evolutionary psychology.
If it is true that most people in a country like the US or the UK would have a better quality of life if those countries were more equal, why have they become significantly less equal over the last 20 or 30 years and can anything be done to reverse the trend? Like Krugman [5] and others, Wilkinson and Pickett do not accept the widely held view that the major cause of increases and decreases in inequality is the operation of the labour market. Instead, they stress the importance of political decisions, such as Bismarck’s reforms in nineteenth century Germany, the election of a Social Democratic government in Sweden in 1932 following violent labour disputes, and changes in institutions, norms and political power in the US and the UK under Reagan and Thatcher in the 1980s. When tax rates are made less progressive, benefits are cut, and trade unions are deliberately weakened, inequality is bound to rise.
The idea that we should refuse to help the poor because that will only make matters worse for everyone – including the poor -- is really only a piece of sophistry, an argument concocted by the wealthy and their apologists to justify grabbing even more for themselves. Hopefully The Spirit Level will help to convince politicians that measures to reduce inequality can benefit of all of us, or at least all those of us who are in the so-called 99%. It should also help the 99% not to be fooled into voting for governments that openly promise to put the interests of the 1% ahead of their own.
Article first published 28/07/14
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Ken Conrad Comment left 29th July 2014 06:06:35
As Gandhi stated, “Earth provides enough to satisfy every man's needs, but not every man's greed.”
Vice indeed appears to be an innate human quality. Virtue on the other hand is an ongoing struggle that demands a conscientious resolve.
Ken
David Llewellyn Foster Comment left 29th July 2014 21:09:25
This is a complex issue, and Professor Saunders should be commended for his coherent and principled summary.
Language is such a significant factor in all discourse, the terms we adopt can be highly suggestive.
I think two notions in particular are helpful to clarify, illustrate and explore the shifting landscape of this complex, dynamic narrative ~ namely "proportion," and "context."
I would suggest the former is the pragmatic (common sense) rule we instinctively understand as a community of intent, to envisage or conceptualize society, both ethically and experientially; or, to frame it another way ~ aesthetically & culturally.
While "context" requires us to consider the broader and deeper environmental, eco-psychological & arguably spiritual factors that determine the conditions by which societies are constrained; the ecosystemic cycles we are actually dependent on, & literally cannot function without.
This requires us to reflexively revisit our first term, because any complete ontological model must engage, embrace and embed all these possible micro/macro relationships, at every scale.
It is the fluid, nuanced processes of life that defy imagination, not the static fixed symbols that are quite readily manipulated to suit our prejudices and confirm those often hereditary (anthropocentric) preferences.
