Why More Equal Societies Almost Always Do Better

http://entertainment.timesonline.co.uk/tol/arts_and_entertainment/books/non-fiction/article5859108.ece?print=yes

by david927 • 17 years ago

28 75 17 years ago

entertainment.timesonline.co.uk

The Sunday Times review of the book "The Spirit Level: Why More Equal Societies Almost Always Do Better" by Richard Wilkinson and Kate Pickett

bkmrkr• 17 years ago

I think we already tried this experiment ... Communism vs Capitalism

noaharc• 17 years ago

That's an extreme, but it's certainly common economic knowledge that income inequality -- in rich nations -- tends to promote economic growth. Of course, common knowledge is sometimes wrong, but I think it takes more than one article to disprove it.

One example of such common knowledge: http://www.springerlink.com/content/w26530m1x3163184/

jackowayed• 17 years ago

Well, this article isn't even refuting the "common knowledge." Economic growth != health and crime rate.

jerf• 17 years ago

There's more to it than that. For context, I'm a little-l libertarian and personally not overwhelmed by a great need for equality, but suppose we take it as a given that this is a Good Thing and should be aimed for. There are a lot of questions: When? At what cost? Who? And perhaps most importantly, how?

Communism in practice boiled down to a three-fold plan: Take the money from the rich and give it to the poor, let the government take over managing the money now that there's no rich people to do it, and give the goverment managers perks that turn them back into rich people in practice, if not on paper. This is what you might call the simple approach, "naive" in the sense that a simple algorithm is "naive".

It turns out to work absolutely terribly, of course, because it fails to take into account higher order effects. Of course with a first-order analysis, if you take all the money in the world and spread it out equally to all people, all people have the same amount of money! The problem is that the analysis can't just end there, for reasons well explored elsewhere.

Perhaps there are smarter ways to do this. It's hard to know. But I am fairly certain that whatever the smarter way is, it doesn't involve just taking money from one person and giving it to another. That has been shown to be all kinds of corrosive to society. (Somewhat ironic, as it is promoted as a cure.)

There are other approaches. We could take a long view of equality, listen to the Singulatarians (even, or perhaps especially, the "weak" Sigulatarians), realize that we're still in a transitional period of wealth generation and that breaking our economies now to spread wealth now may be a terrible idea, as opposed to letting the economies run with a bit of inequality now but attacking the problems (either of inequality or the secondary/related problems in the essay) with orders of magnitude more resources later. Perhaps later we can or should trade economic efficiency for wealth equality, but we can't afford that yet. The wealthiest country on the planet can't even afford that choice for its own citizens, let alone share with the rest of humanity. Maybe the "how" can only be answered in 30, 40, 50 years, and trying to do it now is as stupid as setting up an interstate highway system in 1870.

Or maybe we recognize that rather than tearing rich people down, we should be looking at how to bring poor people up without tearing anybody down. This is possible, but only if you have the correct view of the economy as a non-zero-sum game, which is unfortunately still "uncommon sense".

So, even if we do agree that equality is a desirable goal in and of itself, we are not constrained to take the stupid view of it and believe that we must go with Communism. We could try smarter things, and realize that instant success is not possible and any plan that promises it is therefore flawed. Of course, this is predicated on a willingness for large swathes of the population to think about second-order effects so the odds of this happening are pretty low.

stcredzero• 17 years ago

Equality of opportunity and social equality are the important factors.

I visited Ireland several years ago. I think it was Sligo where someone pointed out a local millionaire's house. It was just another house on the row, and the guy lived a quiet life and still went to the local pub. He didn't fear his neighbors, and his neighbors weren't stressed out by his wealth, including the chap who pointed all this out to me, who happened to be on the Dole!

I also note a marked difference between wait staff in Houston, Texas and Cincinnati, Ohio. Waitresses and waiters seem to be much more servile in Houston, whereas in Cincinnati, I was often simply asked what I wanted. Houston is markedly more affluent as a whole, however.

I too think that the problem lies in an underclass that feels "captive." If you are somehow inferior and underclass because of your race then how in heck are you going to escape? Also, the US has huge disparities in educational opportunities. There's some kind of feedback with those disparities and subcultures that devalue education. (Which seems to be spreading up the socioeconomic ladder!)

Looking at countries that have very good equality of opportunity in terms of relatively equal access to education, there does seem to be a higher level of social cohesiveness. (One example would be Japan, where the education system is highly standardized.)

I agree with your notion of bringing people up. I think that the best way of doing this is by raising the level of education. But I doubt that very much more than lip service and the opportunity to get more money from the government have resulted from most of those initiatives.

zouhair3• 17 years ago

Education and less Oprah and Britney is the key.

Dauntless• 17 years ago

Excuse me but are you joking? Communism was further than Capitalism to an equal society. Communism is a sad excuse for Dictatorship and social engineering of the population. I don't think you are equal or free, when you are allowed only what the state (some people who hold the power) give you.

jibiki• 17 years ago

Here's a relevant graph:

http://i263.photobucket.com/albums/ii139/tolsdogg_photo/life...

The introduction of capitalism had a small but negative impact on life expectancy.

If you were to compare life expectancy in communist countries to life expectancy in capitalist countries, I imagine the capitalists would win, though.

kiba• 17 years ago

I believe the authors is confusing correlation and casuation.

Do you see any rich hacker belittling the little poor startup guys? I think it is more like the rich, successful hackesr is seen as a community resource. They constantly day in and day out give advices to startup newbies on what to do and how to avoid their mistakes.

It is as if each hackers are expected to face obstacles, learn, and then eventually win.

Maybe the inequality problem is more of a cultural thing. Maybe it is about how we deal with inequality? It is kinda like comparing the immigrants to native Americans.

You know, the Vietnamese are famous for their nail saloon and their beef noodles. The Italians specialize in Italian foods. Indian specialize in computer programming.(Note, not all indians want to be programmer, etc) Certainly the field of computer programming and the arts of nail were there long before those immigrants came to America.

Do people rise up to the challenge and overcome poverty or do people hold your head low and envy the rich?

Edit: I just realize that I am just trying to rationalize away the inequality. However, I am still very worried about the potential solutions to this problem.(Assuming it is indeed, correct.)

I know the effect of the mininum wage laws that was supposed to help the poor have a damaging effect on upward social mobility of the working class.

I am very worried that this capped wage proposal would have undersirable unintended consequences.

Perhap the solution to the inequality problem is to lower barrier of entry to the poor such as reducing government red-tape and regulations allowing people to start up business easier, as well reducing labor regulations to open up jobs that were not previously availiable due to labor cartelization via unions and occupational licensure.

inerte• 17 years ago

Oh, c'mon... these guys are not your average armchair statiticians newbies. One of the authors:

"He studied economic history at the London School of Economics before training in epidemiology and is Professor Emeritus at the University of Nottingham Medical School and Honorary Professor at University College London."

The other:

"Kate Pickett is a Senior Lecturer at the University of York and a National Institute for Health Research Career Scientist. She studied physical anthropology at Cambridge, nutritional sciences at Cornell and epidemiology at Berkeley before spending four years as an Assistant Professor at the University of Chicago."

Their board http://www.equalitytrust.org.uk/about/board :

http://en.wikipedia.org/wiki/Molly_Scott_Cato (Phd)

http://www.shef.ac.uk/geography/staff/dorling_danny/ - Danny Dorling was educated at The University of Newcastle upon Tyne in Geography, Mathematics and Statistics leading to a PhD in the Visualization of Spatial Social Structure

http://www.penguin.co.uk/nf/Author/AuthorPage/0,,1000074828,... - gained a BA in Oriental Studies at Oxford, received a Harvard MBA before returning to Scotland to manage the family paper mill business, transforming it into a more open company, for which he was given the ‘Scottish Business Achievement Award’ in 1998. His St Andrews PhD was on the subject of employee ownership

http://www.uel.ac.uk/ssmcs/staff/rustin-michael.htm

Not saying the book is right, but I'll be damned if we have to teach correlation/causation to these people.

edited: The Wikipedia article on "Correlation does not imply causation" cites a "a widely-studied example, (where) numerous epidemiological studies showed". Just a friendly reminder :)

gaius• 17 years ago

Both people who've only ever had State jobs, tho'.

ellyagg• 17 years ago

Nevertheless. One issue is that the US probably has a much higher segment of the population that's at least a standard deviation below average in IQ than European nations do. I'd love to see Finland work with our IQ distribution. Low IQ demographics cause a lot of problems.

bokonist7• 17 years ago

The confusion of correlation with causation is everywhere in the social sciences. The entire profession suffers from the keys and lamppost fallacy. They study intensive mathematics and then they end up trying to attack every problem with regressions, and miss out on the supporting logic that proves causation.

How many useful and accurate predictions do you see coming out of economics? Or out of nutrition for that matter?

This article is a classic example of confusing correlation with causation. The author simply does not detail a chain of cause and effect. And the correlation she poses, does not explain such facts as why Baltimore was really safe in 1900, and is violent wreck today.

zouhair3• 17 years ago

You are lucky not to be in Reddit, you would have been downmoded to smithereens.

vorador• 17 years ago

On a side note, It's seems that the xkcd strip on "correlation and causation" entered into geek culture.

thras• 17 years ago

Rephrased: Diversity sucks.

anamax10• 17 years ago

Which way do people move?

Which way do smart people move?

euccastro6• 17 years ago

Care to elaborate?

pg5• 17 years ago

I think what he means is that the real test of how good things are in various countries is net immigration.

mynameishere2• 17 years ago

Rome wasn't "equal". The British Empire wasn't "equal". America stills rules most of the world. It isn't "equal". If China someday rules the world, you better believe it won't involve an excess of "equality". The research talks about chronic stress and obesity. Guess what? That's just not a significant matter in the grand historical sense.

Can we please drop the Oprah-Winfrey view of the world? Please?

zouhair3• 17 years ago

Which of the countries you cite is doing good?

mynameishere2• 17 years ago

In terms of relevant effect? All of them. Ask me how well XYZ unknown tribe of ABC unknown regional geographic subsection is doing.

pg5• 17 years ago

All of them did huge amounts of good along with whatever bad they did. The Romans (to take an uncontroversially ancient example) were brutal philistines, but can you say the pax romana was not a net win?

euccastro6• 17 years ago

It's not the "grand historical sense" the article is talking about. And it's not what I care about in the country where I live. Give me Norway 2009 over The British Empire anytime.

hpvic03• 17 years ago

Agreed. The fact that inequality can exist is part of what drives capitalism.

If you couldn't get rich and become unequal, a lot fewer people would be out there creating more value for others and driving the economy.

A more equal society = a lower growth economy. And having a strong economy matters because it gives your country power, control, and influence, which from the most basic point of view, enable its citizens to be protected and survive.

gnaritas• 17 years ago

Ruling the world is not equal to doing good or being good. Nor is goodness measured in dollars. The good countries are the ones with the largest percentage of happy content and healthy citizens, not the ones with the most power and biggest bank accounts.

bokonist7• 17 years ago

The northern cities of U.S. were very unequal in the early 1900's, but had much lower murder rates than today. In Baltimore and Philadelphia mansions inhabited by old money sat blocks away from immigrant tenements. Yet the murder rates were a fraction of the rates today.

London in 1900 had a much lower crime rate than London today, despite being far more unequal. ( http://www.parliament.uk/commons/lib/research/rp99/rp99-111.... )

Crime is the default state when you combine low class people with lax law enforcement (and by low class, I mean the cultural attributes of the lower classes. A rich drug dealer is still low class. A grad student living on ramen is not low class). In general, the countries with more low class people will be more unequal. But if you just give the low class people McMansions with pools, they do not become any less violent ( http://www.nytimes.com/2008/08/09/us/09housing.html ). Conversely, if you take an unequal society with a huge lower class, and just get rid of the middle and upper classes, you get Zimbabwe.

Edit: If you're going to downvote a well reasoned argument that provides supporting evidence, you better post your own counter argument.

fhars• 17 years ago

The thing people reacted negatively to was probably you unfounded claim about the causal relationship between lax law enforcement and criminality. Just look at the US which has a law enforcement that is ridiculipously rigid by western standards (IIRC an embarrassing 1% of the adult population is stowed away in jail) and still has considerably higher crime rate than many european countries, and especially the more egalitarian european countries.

bokonist7• 17 years ago

In the U.S. a variety of factors caused law enforcement in the major cities to break down in the late 60's and 70's (factors include: supreme court rulings, the great society, demagoguing politicians, lawsuits). As a result, crime shot upwards. In the 80's and 90's there was a backlash, and law enforcement increased significantly (Rudi Guiliani, etc). As a result, a lot of criminals ended up in jail, and the crime rate dropped.

The paradox of lax law enforcement is that in the long run you have a much higher rate of imprisonment because lax law enforcement creates more criminals. Conversely, Singapore, with its ultra-strict enforcement has very low crime.

In terms of policing, America is like the awful parent who alternates between allowing their kid to drink and get in trouble, and then every once in a while throws a fit and beats the kid. The recipe for good law enforcement is consistency and nipping problems in the bud. If you've ever studied American law enforcement, you'll find it operates in the exact opposite manner.

The crime rate differential between the U.S. and Europe goes back a long time. If you really want to understand it, I highly recommend this book: http://books.google.com/books?id=NGBLAAAAMAAJ&printsec=f... Written in 1920, it barely needs any updating today. And what is the primary causes of the difference in crime rate? President Taft sums it up the best: "It is not much to say, that the administration of criminal law in this country is a disgrace to our civilization, and that the presence of crime and fraud, which is greatly in excess of that in the European countries, is due largely to the failure of the law and its administration to bring criminals to justice."

IsaacSchlueter• 17 years ago

The author fails to explore the possibility that perhaps "doing well" leads to "equality", rather than the other way around.

Or, perhaps "doing well" and "equality" are both caused by something else.

pg5• 17 years ago

"By reducing income inequality, they can improve the health and wellbeing of the whole population."

In the short term, possibly. What they forget is the extent to which technical innovation is driven by economic inequality.

The UK already tried this experiment in the middle of the 20th century. That's why there's no Silicon Valley there. At the time companies like Intel and Apple and Microsoft were being founded in the US, the highest tax rate in Britain was 98%. It wasn't worth trying to start a startup, and people didn't.

http://www.paulgraham.com/inequality.html

david9279• 17 years ago

It's not true. Skype comes from Sweden which has a famously high top tax rate. The experiment is being done everywhere, everyday, in all 193 countries, and I don't think we should measure the success of a society by the technical innovation it produces.

Further, you don't need a high tax rate. Slovakia is currently the country with the least wealth disparity and is a happy, healthy EU country with a U.S.* / European-like tax rate. The individual income tax rate in Slovakia is a flat 19%.

I don't think anyone is talking about "punish the winners" but about providing true equal opportunity. No one is talking about making everyone finish at the same point, but truly having the same starting line. What Slovakia and the rest of Europe get for their taxes includes universal healthcare and a free (or very low cost) university system -- and those two things alone can go a long way toward a more equitable, and happier, society.

* U.S. tax rates appear lower but when you combine federal, state, local and property taxes, it is similar to most European nations.

zcrar70• 17 years ago

U.S. tax rates appear lower but when you combine federal, state, local and property taxes, it is similar to most European nations.

I'm interested in this - do you have any numbers to back this up?

ivankirigin4• 17 years ago

People talk about punishing the winners all the time. The UK is considering a new tax for people making more than X. Pundits are starting to say "we don't need those malcontents who move away from high taxes"

In the US, half the election was about "families making less than $200K a year will not get a tax increase".

pg5• 17 years ago

Bad example. Though Skype's founders were from Sweden, the company was based in Luxembourg, largely for tax reasons:

http://www.luxembourgforict.lu/en/success-stories/skype/inde...

And while I agree entirely that equality of opportunity is the right sort to aim for, the article we're commenting on was in fact advocating not merely equality of opportunity, but equality of result.

xiaoma• 17 years ago

"It's not true. Skype comes from Sweden which has a famously high top tax rate."

Skype was written by three programmers from Estonia-- a country with a flat-tax and much less economic equality.

http://en.wikipedia.org/wiki/Skype

bokonist7• 17 years ago

If the author's hypothesis is true, then if the state grants the lower class a level of material well being equivalent to the middle or upper classes, then then social indicators should improve. Unfortunately, we have tried this already, and it did not work. See this article about Antioch, CA, where the welfare state gave the underclass McMansions with swimming pools, yet crime did not abate ( http://www.nytimes.com/2008/08/09/us/09housing.html ). The same thing happened in Memphis (http://www.theatlantic.com/doc/200807/memphis-crime ). Or in Britain read this article about violence and drug abuse ( http://www.nytimes.com/2007/03/10/world/europe/10britain.htm... ). Note that the subjects of the articles are already taken care of by the welfare state. What more should we give them, so that they will stop committing crimes?

lutorm4• 17 years ago

Perhaps it's not a matter of giving them pools but rather giving them opportunity?

bokonist7• 17 years ago

The crime problem needs to be solved first, or employers will simply never return to the burned out areas. As one super market in Detroit says ( http://www.detroitblog.org/?paged=2 ):

A day in the life of Tom Boy Super Market consists partly of stopping people from robbing the place blind. “There’s so many days when I don’t do nothing,” Jitu says. “My main job is to run the office and I don’t have to be here, but I have to come anyway. You don’t want to have, like, one person here, and then half the store is gone. We have to have so many people. They don’t have to do nothing, but they have to be here.”

ivankirigin4• 17 years ago

Poverty is often defined by the lowest quintile. By that definition there is always poverty. That's bullshit.

We should measure a society by how the poorest live and by the heights achieved. If the problems of the poor are about obesity and not hunger, we're doing really well.

If you have a society where the capable have an incentive to create, and do, you're doing well. If they're considering making a tax shelter or moving, you have problems.

That creative force is what makes it so people on the bottom worry about obesity and not hunger. Incentives for unequal distribution of goods raise the general level of wealth.

A public policy should care a lot more about general wellbeing than emotional wellbeing.

lutorm4• 17 years ago

If the problems of the poor are about obesity, because all they can afford to eat is HFCS-laden industrially processed food that's just cheap calories, that definitely does not mean we are doing really well.

ivankirigin4• 17 years ago

That's not a problem of affordability, but of education. Vegetables, beans, and rice are cheaper than processed food.

That's just a guess though. I don't know why poor people eat junk. Perception of cheapness might be a big part of it. Decadent flavors and bright, colorful packaging also help, I'm sure.

The food topic is really just a metaphor. I could give a similar example with education. If you the problem is the dropout rate of school, and not that your kids need to work on your farm to make ends meet, you're doing OK.

Clearly my standard is a bit extreme in western contexts, but not so much with respect to the rest of the world or recent history.

lutorm4• 17 years ago

The Economist had an article a while back that showed that, the "American dream" notwithstanding, social mobility in the US is lower than in most European nations.

Inequality of outcome leads to inequality of opportunity because the conditions people grow up in are conditional on the income of their parents. This is especially strong in the US due to things like minimum wage being below living wage so low-income parents work several jobs and have less time to interact with their children, school funding being based on local taxes, and colleges' need-based financial aid not keeping pace with tuition increases, to name a few effects.

So people from a low-income background have the deck stacked against them. It's not that no one can make it, but it's much more difficult. And that means that the nation as a whole is not tapping into the full talent pool. People who could have started startups are instead stuck in low-wage jobs because of their background, and that's going to have a negative effect on the economy because it's not tapping into the full potential of the workforce.

anamax10• 17 years ago

> This is especially strong in the US due to things like minimum wage being below living wage

No one pays more than a job is "worth", so a minimum wage simply means that jobs that are worth less don't exist.

Folks learn to become valuable. Working is one way for them to do so. But, if they never get that first job, they never learn.

If you think that folks should have more money than their labor is worth, give them your money (or tax money). Pricing them out of the labor market is bad for everyone.

david9279• 17 years ago

I know it seems like minimum wage would price workers out of the market, but in reality it tends not to work that way. For example, McDonalds doesn't price a hamburger based on costs, but the best price point for a variety of factors, where raising the price will tend to lose profit. And the headcount also is fairly inflexible. So what gets hit? The shareholders wallets.

In other words, raising minimum wage doesn't mean Bob won't get a job, it just means Betty won't get a second yacht.

anamax10• 17 years ago

I find it interesting that these comparisons often focus on income and not wealth.

"In 1998, for example, the richest 1 per cent of Americans took home 14 per cent of total income, while in Sweden the figure was only about 6 per cent. Wealth concentration is another matter, however. The richest 1 per cent of Americans owned about 21 per cent of all wealth in 2000. Some European nations have higher concentrations than that. In Sweden—despite that nation’s egalitarian reputation—the figure is 21 per cent, exactly the same as for the Americans. And if we take account of the massive moving of wealth offshore and off-book permitted by Sweden’s tax authorities, the richest 1 per cent of Swedes are proportionately twice as well off as their American peers."

And, income inequality doesn't always predict poverty the one one might think.

"What about poverty, not the same thing as inequality? Because inequality is greater in America, relative poverty is by definition also higher. But absolute poverty rates look different. If we take absolute poverty to be living on the actual cash sum equivalent to half of median income for the original six nations of the EU, we see that many western European countries in 2000 had a higher percentage of poor citizens than the US; not only Mediterranean countries, but also Britain, Ireland, France, Belgium, the Netherlands, Finland and Sweden. Unemployment benefits in the US, often portrayed as derisory in the European media, are actually higher than in many European nations. Greece, Britain, Italy and Iceland spend less than the US on unemployment, measured per capita."

(Note that the US seems to have lower unemployment rates so higher per-capita spending combined with lower per-capita rates produces even higher per-unemployed-person spending. Yes, I realize that spending doesn't translate into benefits, that administration sucks up a lot of money, but that's a separable problem.)

http://www.prospect-magazine.co.uk/article_details.php?id=10...

Why More Equal Societies Almost Always Do Better

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