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PORTSIDE  February 2012, Week 2

PORTSIDE February 2012, Week 2

Subject:

We're More Unequal Than You Think

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Wed, 8 Feb 2012 22:30:45 -0500

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We're More Unequal Than You Think

Andrew Hacker
www.nybooks.com
FEBRUARY 23, 2012

The Spirit Level: Why Greater Equality Makes Societies
Stronger
by Richard Wilkinson and Kate Pickett 
Bloomsbury, 331 pp., $28.00; $18.00 (paper)                                                  

The Darwin Economy: Liberty, Competition, and the Common
Good
by Robert H. Frank 
Princeton University Press, 240 pp., $26.95                                                  

The Age of Austerity: How Scarcity Will Remake American
Politics
by Thomas Byrne Edsall 
Doubleday, 272 pp., $24.95                                                  

Why Some Politicians Are More Dangerous Than Others
by James Gilligan 
Polity, 229 pp., $19.95                                                  


Columbia Pictures/Photofest
Cary Grant as Johnny Case, a self-made man, at his rich
fiancee's house with her brother Ned (Lew Ayres) and the
butler (Thomas Braidon), in George Cukor's Holiday, 1938

Imagine a giant vacuum cleaner looming over America's
economy, drawing dollars from its bottom to its upper
tiers. Using US Census reports, I estimate that since
1985, the lower 60 percent of households have lost $4
trillion, most of which has ascended to the top 5 percent,
including a growing tier now taking in $1 million or more
each year.1 Some of our founders foresaw this happening.
"Society naturally divides itself," Alexander Hamilton
wrote in The Federalist, "into the very few and the many."
His coauthor, James Madison, identified the cause.
"Unequal faculties of acquiring property," he said, inhere
in every human grouping. If affluence results from inner
aptitudes, it might seem futile to try reining in the
rich.

All four of the books under review reject Hamilton and
Madison's premises. All are informative, original, and
offer unusual insights. None accepts that social divisions
are inevitable or natural, and all make coherent arguments
in favor of less inequality, supported by persuasive
statistics.

1.
The Spirit Level is a prodigious empirical effort directed
to a moral purpose. It ranks the quality of life in
twenty-three countries, mainly European, but with
Singapore, Israel, and the United States also on the list.
To evaluate the well-being of each society, Richard
Wilkinson and Kate Pickett use indices ranging from
obesity and incarceration rates to teenage births and the
feelings people have about their fellow countrymen. They
then relate these variables to how income is distributed
in each society. Here they deploy the Gini ratio, a
three-digit coefficient purporting to measure the extent
of income inequality within any grouping for which figures
are available. Their national Gini scores range from .230
in egalitarian Sweden to .478 in highly stratified
Singapore, with the United States second highest at .450.
Linking social indicators to economic disparities, the
authors conclude that "reducing inequality is the best way
of improving the quality of the social environment."


 
As income gaps grow, they write, it's not only the poor
who suffer. Unequal societies not only bear "diseases of
poverty," but also "diseases of affluence." The latter
include cancer and cardiovascular disease as well as the
afflictions of well-off people who are "anxiety-ridden,"
"prone to depression," and "seek comfort in overeating,
obsessive shopping and spending." At this point, as
elsewhere, the authors tend to get carried away. I'm not
sure I'm ready to rank compulsive spending or eating too
much as diseases. Even so, Wilkinson and Pickett are blunt
in their summary: "inequality is socially corrosive."
What's missing in their analysis is how far, if at all,
income disparities may also degrade the deprived.

The authors don't go so far as to say that people with
above-average incomes would end up better off were they to
take home less money, and if greater numbers of their poor
compatriots had more. But they do contend that "the
benefits of greater equality seem to be shared across the
vast majority of the population." Thus one of their tables
shows that those in the middle class in more egalitarian
England have lower rates of cancer and diabetes than their
counterparts in the United States. American children don't
perform as well academically as their peers in Finland and
Belgium, where incomes are not as widely spread.

The broader argument was made by Oliver Wendell Holmes,
who reputedly told one of his clerks that taxation is how
we "buy civilization." Lower Gini scores generally tell us
that the business and professional classes of such
countries as Norway and Denmark consent to higher tax
rates because publicly provided higher education and
health care and cultural amenities make for a more
congenial society, in which everyone shares.

Wilkinson and Pickett teach at Britain's University of
York, and they aim for an international audience. Yet they
seem to have America mainly in mind when they remark that
"instead of a better society, the only thing almost
everyone strives for is to better their own position."
Here too we're into hyperbole. The United States has a
large stratum of professionals who choose public service
careers; indeed much, even most, of the middle class
doesn't set its sights on more than routine personal
advancement. Still, it's appropriate to ask how many of
the rich care about creating a "better society." Wealth
brings higher-quality health care, private schooling, and
personal pension plans, along with shielding from lines,
crowds, and captious service.

Like many modern studies, most of the findings in The
Spirit Level derive from statistical formulations. I found
myself wanting to know more about the actual people
represented by indicators and indices. In Belgium, taxes
take 42 percent of an average worker's earnings, compared
with 23 percent in the United States; in Denmark, personal
income taxes absorb 27 percent of its gross domestic
product, against 8 percent in the US. How do their
middle-class professionals balance the public and private
in their conceptions of the good life? Do they, for
example, feel that high take-home pay is needed to bring
out people's best efforts? "We see no indication,"
Wilkinson and Pickett say, "that standards of
intellectual, artistic or sporting achievement are lower
in the more equal societies." And as a measure of
innovation, they show that such countries file more
patents per capita. But they don't consider keenly
competitive enterprises--such as Apple and Facebook--from
which Forbes 400 fortunes grow. We hear it claimed that
innovations such as iPhones and iPads are much encouraged
by hopes of inordinate wealth. Is there an egalitarian
alternative?

There's a limitation to the Gini ratio that the authors
don't mention. Because Spain (.320) and Canada (.321) are
so close in Gini ratio, The Spirit Level would have us
conclude they have comparable levels of income. But
similar scores can conceal quite different distributions
of income. Unfortunately, Wilkinson and Pickett don't
explain why. For example, the Gini ratios for New
Hampshire (.425) and Iowa (.427) make them relatively
egalitarian on the American spectrum. However, New
Hampshire gets there by having the same number of high-
and low-income households: 26 percent have annual income
over $100,000 with 26 percent under $35,000. Iowa has
almost the same ratio, but only 15 percent of its
households make above $100,000 and 36 percent fall below
$35,000. The Spirit Level's message is that if countries
want a more equable and equitable society, they should
move toward closing their income gaps. But what can we say
about Iowa's equality if it still has a substantial
low-income segment? Reducing the proportion of the rich
may be a pyrrhic victory if poverty persists.

for the rest of the review, go to
http://www.nybooks.com/articles/archives/2012/feb/23/were-more-unequal-you-think/

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Portside aims to provide material of interest to people
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