21/06: More egalitarian? Expect more income disparity
Interviewing one of the authors of recent book "The Spirit Level: Why Equal Societies Almost Always Do Better" (Richard Wilkinson and Kate Pickett) radio commentator and general life critic Chris Laidlaw pondered with one of the authors recently on how N.Z. is performing given its claim to egalitarianism.
The thesis of the book is - in tones and shroud waving familiar to the left - income disparities are getting ever wider, various capitalists and growth merchants especially bankers are to blame and the usual litany of accusations coupled with hand wringing, which ever flees from the fact that improvements across numerous indicators show that while gaps may widen all measures of central tendency show that the lift from previous levels of poverty for the vast majority of the world have been nothing short of phenomenal.
Interestingly the Guardian tells us the authors are epidemiologists - who swing (predictably if boringly) Krugman into action.... another who has left his field of excellence to fiddle and prognosticate in paddocks best left to others (politics) while he ignores what he is good, even great at (trade economics).
What struck me though was less this tale than the likely misconceptions we have in N.Z. about what sort of society an egalitarian one might be and whether or not it would be characterised by "equality" or even by smaller rather than larger disparities in income.
If a society became more egalitarian should we expect that income disparity would flatten or at least not increase. There is a good argument which suggests we might expect absolutely the opposite..... roughly as follows:
The drive for egalitarianism generally seeks to ensure that success, status (social and economic), positive progress for individuals and any privilege is based on relevant not irrelevant criteria. To the manor... not born, but by merit. Commissioned officers through competence not genealogy. Business success through merit and performance not inheritance. Riches through work not graft, gender, race, family background, school tie and so on.
The more successful a society is in ensuring that irrelevant factors remain just that - irrelevant - the more likely it is that success will arrive only via achievement. Thus just as one cannot "inherit" a place in the All Blacks - it has to be won, so too in a more as opposed to a less egalitarian society, places have to be won by dint of success in relevant skills, competencies and experience, and talents in relevant areas.
By definition, a society which has succeeded in suppressing the matching of status to relevant criteria and has instead allowed the irrelevancies of class, gender and the old school tie to dominate production and distribution will have artificially flattened incomes. Over any reasonable time, the phenomena of reversion to the mean will have ensured that success based on merit will have been leveled by the lacklustre efforts of the hereditary nincompoops.
Thus the average level of competence in the corps of British Officers of today could be expected to sharply exceed that of 200 years ago. In business the same pattern applies. Incomes and dividends are likely to reflect that. Even anecdotally that would appear to be the case.
Sweep away class systems and like non egalitarian criteria from the field and institutionalise entry to business, education, employment based on the more egalitarian factors of merit and demonstrated competence, and those who are excellent will rise and become visible. Lesser lights no longer protected will also be visible. On average the gap between top and bottom must widen. The result will surely be a necessary widening of income gaps (and other measures of improved welfare).
The logic is dreadfully simple. We might even speculate that a lack of income disparity means only one of two things:
1. Levels of poverty are so low that everyone is "equally poor". No doubt "fair" in the eyes of those whose envy exceeds their desire for the tide of growth to raise all boats, or,
2. A lack of the egalitarianism so keenly sought and praised by commentators, the media and politicians.
Either of these is a long way from cursing Thatcher or Reagan, monetarism and classic liberals as suggested by author Richard Wilkinson. More importantly it suggests that once the logic is considered egalitarianism is about equality of opportunity not artificially flattened outcomes.
The thesis of the book is - in tones and shroud waving familiar to the left - income disparities are getting ever wider, various capitalists and growth merchants especially bankers are to blame and the usual litany of accusations coupled with hand wringing, which ever flees from the fact that improvements across numerous indicators show that while gaps may widen all measures of central tendency show that the lift from previous levels of poverty for the vast majority of the world have been nothing short of phenomenal.
Interestingly the Guardian tells us the authors are epidemiologists - who swing (predictably if boringly) Krugman into action.... another who has left his field of excellence to fiddle and prognosticate in paddocks best left to others (politics) while he ignores what he is good, even great at (trade economics).
What struck me though was less this tale than the likely misconceptions we have in N.Z. about what sort of society an egalitarian one might be and whether or not it would be characterised by "equality" or even by smaller rather than larger disparities in income.
If a society became more egalitarian should we expect that income disparity would flatten or at least not increase. There is a good argument which suggests we might expect absolutely the opposite..... roughly as follows:
The drive for egalitarianism generally seeks to ensure that success, status (social and economic), positive progress for individuals and any privilege is based on relevant not irrelevant criteria. To the manor... not born, but by merit. Commissioned officers through competence not genealogy. Business success through merit and performance not inheritance. Riches through work not graft, gender, race, family background, school tie and so on.
The more successful a society is in ensuring that irrelevant factors remain just that - irrelevant - the more likely it is that success will arrive only via achievement. Thus just as one cannot "inherit" a place in the All Blacks - it has to be won, so too in a more as opposed to a less egalitarian society, places have to be won by dint of success in relevant skills, competencies and experience, and talents in relevant areas.
By definition, a society which has succeeded in suppressing the matching of status to relevant criteria and has instead allowed the irrelevancies of class, gender and the old school tie to dominate production and distribution will have artificially flattened incomes. Over any reasonable time, the phenomena of reversion to the mean will have ensured that success based on merit will have been leveled by the lacklustre efforts of the hereditary nincompoops.
Thus the average level of competence in the corps of British Officers of today could be expected to sharply exceed that of 200 years ago. In business the same pattern applies. Incomes and dividends are likely to reflect that. Even anecdotally that would appear to be the case.
Sweep away class systems and like non egalitarian criteria from the field and institutionalise entry to business, education, employment based on the more egalitarian factors of merit and demonstrated competence, and those who are excellent will rise and become visible. Lesser lights no longer protected will also be visible. On average the gap between top and bottom must widen. The result will surely be a necessary widening of income gaps (and other measures of improved welfare).
The logic is dreadfully simple. We might even speculate that a lack of income disparity means only one of two things:
1. Levels of poverty are so low that everyone is "equally poor". No doubt "fair" in the eyes of those whose envy exceeds their desire for the tide of growth to raise all boats, or,
2. A lack of the egalitarianism so keenly sought and praised by commentators, the media and politicians.
Either of these is a long way from cursing Thatcher or Reagan, monetarism and classic liberals as suggested by author Richard Wilkinson. More importantly it suggests that once the logic is considered egalitarianism is about equality of opportunity not artificially flattened outcomes.
