The Primacy of Equity

Richard Wilkinson & Kate Pickett, The Spirit Level: Why Greater Equality Makes Societies Stronger (New York: Bloomsbury Press, 2009)

From the Foreword by Robert B. Reich (pages v-vi)

“Most American families are worse off today than they were three decades ago. The Great Recessions of 2008-2009 destroyed the value of their homes, undermined their savings, and too often left them without jobs. But even before the Great Recession began, most Americans had gained little from the economic expansion that began almost three decades before. Today, the Great Recession notwithstanding, the US economy is far larger than it was in 1980. But where has all the wealth gone? Mostly to the very top. The latest data shows that by 2007, America’s top 1 percent of earners received 23 percent of the nation’s total income—almost triple their 8 percent share in 1980.

This rapid trend toward inequality in America marks a significant reversal of the move toward income equality that began in the early part of the twentieth century and culminated during the middle decades of the century.” ….

“If politicians have failed to grapple with the issue of inequality, few scholars have done better. Philosophers have had little to say on the subject. Some who would tax the rich to help the poor frame their arguments as utilitarian. Taking a hundred dollars from a rich person and giving it to a poor person would diminish the rich person’s happiness only slightly, they argue, but greatly increase the happiness of the poor person….

Nor have economists, whom we might expect to focus attention on such a dramatic trend, expressed much concern about widening inequality. For the most part, economists concern themselves with efficiency and growth.”

From the Preface (pages ix – x)

(One of the best indicators of quality of life comes from) “trying to understand the causes of the big difference in life expectancy – the ‘health inequalities’ – between people at different levels in the social hierarchy in modern societies. The focal problem initially was to understand why health gets worse at every step down the social ladder, so that the poor are less healthy than those in the middle, who in turn are less healthy than those further up.” …

“The reason why the picture we present has not been put together until now is probably that much of the data has only become available in recent years. With internationally comparable information not only on incomes and income distribution but also on different health and social problems, it could only have been a matter of time before someone came up with findings like ours.”

From Chapter One (pages 3 – 8)

It is a remarkable paradox that, at the pinnacle of human material and technical achievement, we find ourselves anxiety-ridden, prone to depression, worried about how others see us, unsure of our friendships, driven to consume and with little or no community life. Lacking the relaxed social contact and emotional satisfaction we all need, we seek comfort in over-eating, obsessive shopping and spending, or become prey to excessive alcohol, psychoactive medicines and illegal drugs.” …

“For thousands of years the best way of improving the quality of human life was to raise material living standards….But for the vast majority of people in affluent countries the difficulties of life are no longer about filling our stomachs, having clean water and keeping warm. Most of us now wish we could eat less rather than more. And, for the first time in history, the poor are – on average – fatter than the rich. Economic growth, for so long the great engine of progress, has, in the rich countries, largely finished its work. Not only have measures of wellbeing and happiness ceased to rise with economic growth but, as affluent societies have grown richer, there have been long-term rises in rates of anxiety, depression and numerous other social problems. The populations of rich countries have got to the end of a long historical journey.

The course of the journey we have made can be seen in Figure 1.1. It shows the trends in life expectancy in relation to Gross National Income per head in countries at various stages of economic development. Among poorer countries, life expectancy increases rapidly during the early stages of economic development, but then, starting among middle-income countries, the rate of improvement slows down. As living standards rise and countries get richer and richer, the relationship between economic growth and life expectancy weakens. Eventually it disappears entirely and the rising curve in Figure 1.1 becomes horizontal – showing that for rich countries to get richer adds nothing further to their life expectancy. That has already happened in the richest thirty or so countries – nearest the top right-hand corner of Figure 1.1.

The reason why the curve in Figure 1.1 levels out is not because we have reached the limits of life expectancy. Even the richest countries go on enjoying substantial improvements in health as time goes by. What has changed is that the improvements have ceased to be related to average life living standards. With every ten years that passes, life expectancy among the rich countries increases by between two and three years….

While good health and longevity are important, there are other components of the quality of life. But just as the relationship between health and economic growth has leveled off, so too has the relationship with happiness. Like health, how happy people are rises in the early stages of economic growth and then levels off. This is a point made strongly by the economist, Richard Layard, in this book on happiness. (Happiness. London: Allen Lane, 2005.)

From Chapter 15 (page 215 – 217)

“Ever since the Brandt Report in 1980 people have suggested that social and environmental sustainability go together. It is fortunate that just when the human species discovers that the environment cannot absorb further increases in emissions, we also learn that further economic growth in the developed world no longer improves health, happiness or measures of wellbeing. On top of that, we have now seen that there are ways of improving the quality of life in rich countries without further economic growth.

But if we not need to consume more, what would be the consequences of consuming less? Would making the necessary cuts in carbon emissions mean reducing present material living standards below what people in the rich world could accept as an adequate quality of life? Is sustainability compatible with retaining our quality of life?

One starting point for answering this question is Figure 15.1 which shows that low infant mortality rates can be achieved without high levels of carbon emissions. Clearly many countries achieve levels of infant mortality as low as the richest countries while producing much less carbon. However, a more comprehensive answer to the question comes from the World Wildlife Fund (WWF), which analyzed data relating the quality of life in each country to the size of the ecological footprint per head of population. (World Wildlife Fund, Living Planet Report 2006. Gland, Switzerland: WWF International, 2007.) To measure the quality of life they used the UN Human Development Index (HDI) which combines life expectancy, education, and Gross Domestic Product.”

Paul Collier, The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It, (Oxford: Oxford University Press, 2007) 

From Preface (pages xi – xii) 

(The Bottom Billion) The problems these countries have are very different from those we have addressed for the past four decades in what we have called “developing countries”—that is, virtually all countries besides the most developed, which account for one-sixth of the earth’s people. For all this time we have defined developing countries so as to encompass five billion of the six billion people in the world. But not all developing countries are the same. Those where development has failed face intractable problems not found in the countries that are succeeding….

Unfortunately, it is not just about giving these countries money. If it were, it would be relatively easy because there are not that many of them. With some exceptions, aid does not work so well in these environments, at least as it has been provided in the past. Change in the societies at the very bottom must come predominantly from within; we cannot impose it on them. In all these societies there are struggles between brave people wanting change and entrenched interests opposing it. To date, we have been largely bystanders in this struggle. We can do much more to strengthen the hand of the reformers.

From Chapter One (pages 3 – 5)

“The countries at the bottom coexist with the twenty-first century, but their reality is the fourteenth century: civil war, plague, ignorance. They are concentrated in Africa and Central Asia, with a scattering elsewhere. Even during the 1990s, in retrospect the golden decade between the end of the Cold War and 9/11, incomes in this group declined by 5 percent. We must learn to turn the familiar numbers upside down: a total of five billion people who are already prosperous, or at least are on track to be so and one billion who are stuck at the bottom.

The problem matters, and not just to the billion people who are living and dying in fourteenth-century conditions. It matters to us. The twenty-first century world of material comfort, global travel, and economic interdependence will become increasingly vulnerable to these large islands of chaos. And it matters now. As the bottom billion diverges from an increasingly sophisticated world economy, integration will become harder, not easier.

And yet is a problem denied, both by development biz  and by development buzz. Development biz is run by the aid agencies and the companies that get the contracts for their projects. They will fight this thesis with the tenacity of bureaucracies endangered, because they like things the way they are. A definition of development that encompasses five billion people gives them license to be everywhere, more or honestly, everywhere but the bottom billion….

Development buzz is generated by rock stars, celebrities, and NGOs. To its credit, it does focus on the plight of the bottom billion.”…

“The concept of a development trap has been around for a long time and is most recently associated with the work of economist Jeffrey Sachs, who has focused on the consequences of malaria and other health problems. Malaria keeps countries poor, and because they are poor the potential market for a vaccine is not sufficiently valuable to warrant drug companies making the huge investment in research that is necessary. This book is about four traps that have received less attention: the conflict trap, the natural resources, trap, the trap of being landlocked with bad neighbors, and the trap of bad governance in a small country. Like many developing that are now succeeding, all the countries that are the focus of this book are poor. Their distinctive feature is that they got caught in one or another of the traps.

From Chapter 11 (page 189 – 192)

“The Millennium Development Goals encouraged people to shift their agenda from inputs to outcomes: halving poverty, getting children in school, and so forth. But despite this advance, the goals have two weaknesses, both involving a lack of focus.

The first critical lack of focus is that the MDGs track the progress of five billion of the six billion people on our planet. It is of course politically easier for the United Nations to include almost everyone. Plus the aid agencies prefer a wide definition of the development challenge because that justifies a near-global role for their staff. The price we pay is that our efforts are spread too thin, and the strategies that are appropriate only for the countries at the bottom get lost in the general babble. It is time to redefine the development problem as being about the countries of the bottom billion….

The other critical lack of focus is on strategies to achieve the goals. Growth is not a cure-all, but the lack of growth is a kill-all. Over the past thirty years the bottom billion has missed out on global growth of unprecedented proportions. This failure of the growth process is the overwhelming problem that we have to crack.”…

“Within the societies of the bottom billion there is an intense struggle between brave people who are trying to achieve change and powerful groups who oppose them. The politics of the bottom billion is not the bland and sedate process of the rich democracies but rather a dangerous contest between moral enemies. The struggle for the future of the bottom billion is not a contest between an evil rich world and a noble poor world….

We do not need to be bystanders. Our support for change can be decisive. But we will need not just a more intelligent approach to aid but complementary actions using instruments that have not conventionally been part of the development armory: trade policies, security strategies, changes in our laws, and new international charters.”

Stephen A. Marglin, The Dismal Science: How Thinking Like an Economist Undermines Community (Cambridge MA: Harvard University Press, 2008)

From the Preface (page ix – xv)

“When markets become a sphere unto themselves, an autonomous system that regulates our lives, they join the state as the proximate cause of the community’s demise.

Economics is the enabler; economics provides the justification for building a world based on markets. This world, our “developed world,” has no place for community, except for national communities, and as globalization proceeds, less and less place for national communities as well.”…

“Beyond answers to the question that had brought me to Dhabi, I learned something infinitely more valuable: an entirely different way of knowing and being in the world from anything I had ever imagined. Like all of us, I was a product of my culture; I had never questioned the idea that society was composed of self-interested individuals who rationally calculated their way to more and more. In Dhabi, I experienced something very different: not that people lacked all sense of self or of individual interests, not that people acted without rational deliberation, but that people lived their lives in deep connection with others—in short, in community.

A human life was not conceived of as beginning at birth and ending with death, but as a link in a chain that existed in space as well as in time, connecting family, clan, and village….

I had an intuitive sense that economic development dissolved the glue that … kept a village like Dhabi together. But what was that glue? And, more important, was there inevitably a tradeoff between material prosperity and maintaining the cultural integrity of the family or village? And is cultural integrity necessarily a good thing if it involves, as it did in Dhbai, the subordination of women (particularly young women), untouchability, and large disparities in income and wealth? Does cultural integrity require that every custom, every tradition, be maintained? How much can a culture change without losing its identity?”

From Chapter 1 (pages 1 – 4 & 13 – 14)

“The first-century Jewish sage Hillel asked: “If I am not for myself, who will be? And if I am only for myself, what am I? And if not now, when?” The claims of the individual and the claims of the community conflict. And not a bad thing: this tension is normal, healthy, and even creative. It should not be resolved once and for all in favor of either the individual or the community. But over the past four hundred years, the ideology of economics has fostered both the self-interested individual and the market system, and has undermined, and continues to undermine community.”…

“Markets can be credited with promoting economic growth, and it is undeniable that much good has come with growth (longer lives, less physical discomfort, and even less pain, better nutrition, less hard physical toil, to mention only a few of the positives of growth). My argument with my fellow economists is not that they strike a different balance with respect to the gains and the losses of extending the sway of markets; it is that they do not recognize the losses at all. If communities are once again to flourish, then we will have to address the failures of a social order based on markets, and not just applaud its successes. Poverty makes growth necessary for much of the world—Mohandas Karamchand Gandhi, the Mahatma, once wrote that if God wanted a warm reception from the Indian masses, He would be well advised to appear in the form of a loaf of bread. By contrast, we who live in rich countries, awash in goods and services, have no compelling argument. Indeed, we may have good reason to dismantle the engine of growth—not because growth is a threat to our relationship with nature, but because it is a threat to our relationships with each other.”…

“In a word, markets are the cutting edge of the loss of human connection. Economists see this as a virtue. Impersonal markets accomplish more efficiently what the connections of social solidarity, reciprocity, and other redistributive institutions do in nonmarket societies. Take fire insurance. I pay a premium of, say $200 per year, and if my barn burns down, the insurance company pays me $60,000 to rebuild it. A simple market transaction has replaced the more cumbersome process of gathering my neighbors for a barn raising. In terms building barns with a minimal expenditure of resources, insurance may indeed be more efficient that gathering the community each time somebody’s barn burns down. But in terms of maintaining the community, insurance is woefully lacking.”