Arnold Kling  

The Case Against Inequality

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In an interview, Richard Wilkinson says


I think people are extremely sensitive to status differentiation and to being looked down on, or disrespected, and those often seem to be the triggers to violence. We quote an American prison psychiatrist who goes so far as to say he's never seen a serious act of violence that wasn't provoked by loss of face or humiliation, and so on. And in more unequal societies, status matters even more. People judge each other more by status. There's more insecurity. And people at the bottom are more often excluded from the markers of status, the jobs and housing and cars, so they become even more touchy about how they're seen.

Wilkinson likes Sweden, where there is less inequality.

Why is the nation-state the relevant unit for measuring inequality? Sweden has 9.2 million people, and we have 300 million, so we are bound to have more inequality, particularly by the sorts of measures Wilkinson uses.

Instead of an international comparison, why not compare, say, Indiana with Sweden, or Indiana with New York City? Is Indiana much more unequal than Sweden? I assume inequality is less in Indiana than in New York City. How does that affect happiness in the two places?

I raise this point because I think the only way we could have a more egalitarian society would be if we broke the country up into smaller units, and we measured equality within the unit. Otherwise, the amount of political power it would take to get rid of the economic inequalities among 300 million people spread over such a large area would be frightening. It might be equally difficult to produce equality in Europe, if one defines equality by looking at the bottom of the ladder in, say, Croatia, with the top of the ladder in, say, Germany.


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CATEGORIES: Income Distribution



COMMENTS (27 to date)
Sam writes:

Wilkinson: "In Sweden, people don’t bother to check your tickets on the train or bus. And it just feels so much nicer."

When and where in Sweden? They checked tickets when I lived in Lund ten years ago. And I think some of trust/social cohesion he's attributing to relatively low income equality springs from ethnic/cultural homogeneity.

Alex J. writes:

People shouldn't consider unhappiness due to inequality without considering envy.

fmb writes:


From wikipedia:

In 2005 the gini index for the EU was estimated at 0.31,[9] as a comparison the USA has 0.463,[10]

Also:

The population of the EU was 499 million as of 2008. Non-EU countries situated in Europe in their entirety[2] account for another 94 million.

Andy writes:

I guess we have to decide whether it's worth it to be poorer but "more equal". Would you rather earn $100k while your neighbor earns $200k or earn $50k while your neighbor earns $75k?

hacs writes:

Some of their graphs at

http://www.fgoe.org/veranstaltungen/fgoe-konferenzen-und-tagungen/archiv/9-osterreichische-praventionstagung-soziale-ungleichheit-und-gesundheit/WILKINSON.pdf

Tom West writes:

Arnold's question about who do we compare ourselves with is a good one. Obviously, it used to be with those in our immediate social circle, or at least those we could see.

Then with greater communication, we got to compare ourselves the elites in our country.

Now, with global communication and a massive media empire, everybody gets to compare themselves with the richest people on the planet, the USA. (Helped with a massive media empire sending images that exaggerate American wealth. (Think on how many shows have people theoretically eking by that happen to live in houses/apartments renting $3-5K/month.))

I think that there's a case to be made that the by simply existing, the USA has globally decreased happiness.

(Yes, I'm joking... mostly.)

Contemplationist writes:

Wilkinson is an outright dishonest fraud.
http://super-economy.blogspot.com/2010/02/spirit-level-is-junk-science-part-deux.html

Data mining of the worst kind does not inspire confidence. He is the Kevin Hassett of the left.

Matt writes:

People shouldn't read into gini coefficiant too much. There are numerous criticisms, almost all give the United States slack on inequality. More Analysis is needed to measure egalitarianism.

jsalvatier writes:

The utilitarian liberaltarians (me), would say that the justification for redistribution lies in the simple fact of declining marginal utility. Rich people find less use in consumption than comparatively poorer people. Now obviously the inequality between nations dwarfs the inequality within nations; immigration is great. But to some extent we must work with the political reality that people hate giving to foreigners (more than token amounts anyway); it is still better than nothing to redistribute within a nation.

Jayson Virissimo writes:

Why should we believe that if income is more equal envy will decrease? Isn't it just as likely that envy will simply shift to a different metric such as who has a better appearance, is more respected, or is more successful with the opposite sex?

agnostic writes:

Transfer wealth all you want, but you cannot transfer esteem or praise -- and that's what people are really after, not money.

That's why unskilled couch potatoes who win the lottery don't feel like people who earn big bucks through accomplishment. The money that you earn is just a proxy for how much others value what you do.

The true reason poor people feel unhappy is because they get the signal that others don't really value what they do as much as what others do. They do not want for any material necessities; it is the feeling of being a worthless loser that stings.

Compare with people who aren't wealthy by choice, who earn the praise of others through non-monetary ways. Schoolteachers, grad students, etc. -- they're pretty happy despite having little wealth because they feel that what they're doing is praiseworthy. The teacher earns the affection of her schoolchildren, the grad student is told that he's onto a great idea, and so on.

If the transfer of wealth would massively boost the poor's happiness, maybe there'd be something to debate. But if it's not going to enhance their feeling of praise-worthiness -- and getting a pity transfer will hardly do that -- then we can ignore the proposal altogether.

agnostic writes:

Moreover, the only way transfers have worked is not to present them as a utilitarian transfer to boost happiness among the low-status. The recipients would see it as pity and reject it out of pride.

Rather, it is presented as the correction of a violation of justice that the high-status have inflicted on the low-status. Then the recipients don't see themselves as on the dole, but as victims who are finally getting justice.

Of course, enraging the low-status about the so-called reigning injustice will hardly make them happier in the meantime or even once they get their transfer -- "Well it's about g.d. time they gave us what's ours! What a screwed up world we live in!" And the fact that they didn't earn it will always be a huge chip on their shoulder.

This doesn't apply only to transferring wealth from rich to poor; same goes for transferring wanted jobs from whites to blacks, men to women, etc.

Randy writes:

Equality does not, and cannot, exist. Our inherent concern with status is the proof of this. Therefore, empowering politicians to create "equality" is an act of desperation. And desperation is an indicator of low status.

Socialism is a low status ideology.

Tim Worstall writes:

Using the Gini (with all the appropriate caveats) the US is pre tax and pre benefits at about .48. So is Sweden.

After tax and benefits the US is around .41, .42 or so and Sweden .25 or so. (Rough numbers from memory).

Not seen post tax post benefit numbers for States individually, only pre tax and pre benefit. But inequality within each State is not hugely lower than inequality in the US overall.

http://www.census.gov/hhes/www/income/histinc/state/state4.html

Indiana .42 in 1999.

There is a weak relationship between the population of a state and the gini....higher population is associated with a higher gini.

Lo Statuz writes:

Napier and Jost think conservatives are happier than liberals because income inequality bothers conservatives less. If they're right, liberalism itself can be seen as a cause of unhappiness.

Randy writes:

Lo Statuz,

I'm thinking its an effect rather than a cause. Neo-liberals (that is, socialists) are low status individuals, or perceive themselves to be low status individuals*, and it is their perception of their low status that draws them to a socialist ideology. The ideology allows them to take on an air of superiority that they do not really have.

*E.g., politicians and actors, neither of which produce anything of real value, and therefore must make up stories to convince themselves that they have value.

Snorri Godhi writes:

Agnostic's comments find me in strong agreement.
People who praise the Nordic countries, but do not move there, are likely to be charlatans. I suspect Wilkinson in particular of being a charlatan because, if I am not mistaken, Ruut Veenhoven and his research group have shown that
[a] increasing welfare benefits does not increase happiness and
[b] increasing economic freedom does increase happiness, independently of increasing wealth.

Another point: from the article linked to:
the USA topping the charts among developed countries for some social ailment: drug use, obesity, violence, mental illness, teenage pregnancy, illiteracy.

I'd guess that all of these ailments, except perhaps obesity, are worse in Blue states than in Red states. Since inequality also tends to be higher in Blue states, this fact kind of supports Wilkinson's claim, although in a way that he probably would not like.

Chris Koresko writes:

At the risk (certainty?) of being massively non-PC, I'd like to follow Lo Statuz and suggest that liberalism may be the root cause of many of America's ills. Here I pretend that correlation implies causation.

So we know that Conservative Christian men are happier and healthier, take better care of their wives and children, contribute more of of their time, money, and blood, are more loyal employees, and commit less crime.

If we accept that it is the proper role of government to work for the general betterment of society by creating social change, does that not imply that encouraging Conservatism and Christianity are sound policy goals?

dlr writes:

Dear Dr. Kling, I thought you would like to know that Amazon.com doesn't offer a 'look inside' your new book 'Unchecked and Unbalanced', and Google only offers a 'snippet view', which is to say, no view at all.

I suppose the reason for this is that your publisher isn't too clued in to internet marketing, or something. But by doing this they are really interfering with sales of your book. The only way it is possible to get people to buy book on-line is to let them read a little bit of it and see if it is something they are interested in.


Best Wishes

Snorri Godhi writes:

Like Lo Statuz and Chris Koresko, I too think it important that American conservatives are statistically happier than American "liberals". However, I do not think that correlation implies causation in this case. More precisely, I think that both conservatism and happiness are caused by a common factor: lower house prices in Red states; that is, low house prices make states both Red and happy. See Steve Sailer on the "dirt gap". I myself am much happier after leaving Denmark, the main reason being the Danish housing market.

KevinL writes:

"the USA topping the charts among developed countries for some social ailment: drug use, obesity, violence, mental illness, teenage pregnancy, illiteracy.

I'd guess that all of these ailments, except perhaps obesity, are worse in Blue states than in Red states."

That's incorrect. Pretty much any measure of personal/social dysfunction is worse on average in red states than in blue states.

Rimfax writes:

The leap from "violence is caused by loss of face or humiliation" to "financial inequality causes violence" is much larger than Wilkinson thinks it is.

Snorri Godhi writes:

KevinL:
That's incorrect. Pretty much any measure of personal/social dysfunction is worse on average in red states than in blue states.

Yeah, that's why US conservatives live longer, have more children, give more to charity, and are happier than US "liberals", right? These are all "dysfunctions".

(For the record, I am not American, do not live in the USA, and would reject both the "conservative" and "libertarian" labels, if applied to me; and most certainly I reject the "liberal" label in the American sense.)

floccina writes:

And that is why people with the highest status in our shallow society, professional football and basketball players rarely commit crimes.

fundamentalist writes:

In the past few decades, in which nations have we seen social unrest due to inequality? France is pretty much it. Third world countries have much higher inequality and very little violence from it.

dave writes:

You know where there is a lot of inequality: in academia. Once you are tenured you never have to work again. You can show up to a class - if you are even teaching one- say whatever you want regardless if it is meaningful to the students - and always know that regardless of performance, you will collect a paycheck. You can then write articles on how people who live in crappy socialist nations, with crappy healthcare, who have no ambition and who have never produced a thing of value are happy because every other slug in the nation shares the same adolescent values and lives in the same squalor - while being invaded by Islamic hoards.

Id rather live in a nation and in a culture where hard work is rewarded. If you are lazy you get nothing. If you are unhappy because you are lazy and have nothing while someone who works hard has more than you - too bad.

I'm tired of hearing how great European socialist nations are so far superior to the US. If academics love these nations so much they should give up their tenure and move there.

James Christopher writes:

According to a review of Economics Facts and Fallacies I read (havent read it myself), Thomas Sowell casts serious doubt on the notion that poverty (namely black poverty) is the real source of crime, pointing out that back in some of the poorest days of Harlem, it was also one of the safest periods.

Poverty is only one factor, as far as I'm concerned, and unless its extreme poverty (struggling to survive, so even if you dont like robbing people, youre still drive to do it), its not even that big of a factor.

People who are criminally motivated will tend to lean that way regardless of socioeconomic conditions, and people who would normally favor abiding by the law -- may be driven to crime in extreme circumstances, arent going to be out committing crimes in situations of just "regular poverty".

In any case, the way to cure poverty is through economic progress and increase of average real wages.

Many people claim that theyre really just looking to help the super-poor people have a chance, but there actions betray their real intentions -- they dont like the idea that an entrepreneur or a CEO should be far richer than a person making an average wage.

So really, what I see, is often their personal beliefs on this matter, masquerading as an agenda seeking to do what is best for poverty.

And then the problem is that even if people with a better understanding of economics know that taxing the productive to lift up the bottom isn't the way to go, the general public doesnt know this........ and they are the ones who soak it up.

People who more more against inequality than poverty are never going to be convinced. It's the public that matters, if you want things to change.

The average public only knows what the "experts" on TV tell them.

I hope to see things like organizations that branch out into community level organization, which work to educate people of these things at the local level.


And I'm convinced, from reading the books and stories of people whose work is in teaching leadership, building community, helping underprivileged kids, etc -- that self-esteem, or lack of it, is the real source of much crime. Not the "feel-good" concept of self esteem that is common, but the sense of empowerment that comes from having accomplished something yourself, or coming together with others to accomplish something.

But whatever the cause -- the key, to me, is always that you can't instill these things with government bureaucracies. Whatever the best approach to crime is, it has to come from a free market, where people who have a passion for this sort of thing, go out there, and work one-on-one in community efforts, organizations, etc. You have to have passion and heart to make these things work, and government can't allocate passion -- it can only happen through liberty -- which is the fundamental reason why "government can't fix problems" -- aside from the economic factors.

That's the only real solution to any problems created by "inequality".

But the thing is, that the public needs to understand this, for anything to change.

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