Inequality, the Market and Democracy by Wilkinson and Pickett

http://www.equalitytrust.org.uk./about-inequality

The weight of evidence – our own and that of many others – and its continued rapid accumulation, make the important between income inequality and social dysfunction inescapable.  But ill-founded and politically motivated criticism can muddy the waters and leave people with the impression that the evidence is less clear than it is. Imagine if someone were to assert (with no justification whatsoever) that climate science had not taken account of, say, the effects of variations in the salinity of different oceans. Unable to evaluate this claim, the inexpert listener might assume that this was an important factor, and that perhaps it had not been properly considered.

What often appear to be ‘balanced’ discussions in the media can be misleading. This happens even in areas of science where the accumulation of evidence leaves little legitimate room for doubt.  For example, if 98 per cent of climate change scientists agree on an issue, and 2 per cent disagree, then inviting one person from each camp to take part in a new program or public debate can leaver people with an impression that an issue is much more controversial than it is. Only those viewers or readers who are particularly diligent or highly motivated will be able to pursue the issues in detail.  Rather than considering our replies to political attacks on our work, we expect some who are opposed to greater equality will simply be content to imagine that this issue is ‘controversial’ and can now be safely ignored.

Perhaps the best tactic in this situation is to address the beliefs that motivate the attacks. In Merchants of Doubt, Oreskes and Conway suggest that the defense of a kind of free market fundamentalism is the most plausible explanation of why the same individuals and institutions are often involved in attacks on research in areas as diverse as tobacco control and the evidence on climate change. As well as defending the free market, they see themselves as countering tendencies to big government and protecting democracy. The same beliefs are likely to guide the attacks on evidence of the social damaging effects of inequality.

If that is the motivation, then it is based on a serious misconception, one which is almost the opposite of the truth.  Greater inequality actually increases the need for big government – for more police, more prisons, more health and social services of every kind. Most of these services are expensive and only very partially effective, but we shall need them for ever if we continue to have high levels of inequality that create the problems they are designed to deal with.

 Several states in the USA now spend more on prisons than on higher education.  In fact, one of the best and most humane ways of achieving small government is by reducing inequality.. Similarly, the assumption that greater equality can only be achieved through higher taxes and benefits, which presumably led The Tax Payer’s Alliance to publish its criticism of The Spirit Level, is also a mistake. We have been at pains to point out that some societies achieve greater equality with unusually low taxation because they have smaller earnings differences before taxes.

There are few things more corrosive of a properly functioning democracy and of the market than corruption and unbridled greed. Although the international measures of corruption currently available were designed primarily to assess levels of corruption in poorer countries, they strongly suggest that one of the likely costs of greater inequality is increased corruption in government and society more widely. Trust and the strength of community life are weakened by inequality, and this is true not only of interpersonal trust, but also of trust in government – the difference between the attitude of Americans and Scandinavians  to their government is well known.  The international data and data for American states suggests people  trust government less in states with high levels of income inequality.  Whether or not this reflects a greater separation of interests and an increasing sense of ‘us and them’ between people at opposite ends of the social ladder, it certainly suggests that too much inequality is a threat to democracy.

Economists sometimes suggest (usually following an extremely simplified and miscalculated version of Hayek’s hypothesis) that the market is like a democratic voting system: our expenditure pattern is, in effect, our vote on how productive resources should be allocated between competing demands. If this is true, someone with twenty times the income of another effectively gets twenty times as many votes. As a result inequality seriously distorts the ability of economies to provide for human needs: because the poor cannot afford better housing, their demand for it is ‘ineffective’, yet the spending of the rich ensures scarce productive assets are devoted instead to the production of luxuries. . .

Rather than being a threat to democracy and the market, reductions of inequality are surely an essential part of their defense. As this book shows, greater equality will benefit even those who would deny the evidence. Understanding the issue is already changing attitudes among politicians. In Britain The Spirit Level has been endorsed across the political spectrum. In a major speech at the end of 2009, David Cameron, now the Conservative prime minister, said The Spirit Level showed ‘that among the richest countries, it’s the more unequal ones that do the worse according to almost every quality of life indicator . . .per capita GDP is much less significant for a country’s life expectancy, crime levels, literacy and health than the size of the gap between the richest and poorest in the population . . .We all know, in our hearts, that as long as there is deep poverty living systematically side by side with great riches, we all remain poorer for it.’  In September 2010, in his first major speech as leader of the Labor Party, Ed Miliband said ‘I do believe this country is too unequal and the gap between rich and poor doesn’t just harm the poor, it harms us all. If you look round the world – at the countries that are healthier, happier, and more secure – they are the more equal countries.’ Liberal Democrats in the coalition government signed pledges committing themselves to reducing inequalities.

Words are a start, but changing policies and politics, changing the way our societies organize themselves, will require the evidence to be recognized even more widely.