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Closing the Gap: who’s listening?

Written By: - Date published: 10:22 am, January 27th, 2012 - 31 comments
Categories: equality - Tags:

Anybody who has read, or even heard of, The Spirit Level knows that science is finding links between income inequality and the health of the society we live in – and the health of its citizens among other things.

In the UK the debate has gone very mainstream, with all 3 major parties vowing to fight income inequality, and their leaders signing a pledge along similar lines.  From that they’ve had the High-Pay Commission working out how to stop those at the top carving themselves ever bigger slices of the pie by awarding themselves ever bigger salaries and bonuses.

They’re working on rules to reduce the ability of CEOs to award themselves salaries largely unfettered by shareholders.  RBS’s head is likely to get his bonus cut in the next few days – to below GBP1 million!

The mood has even affected Davos as the wealthy and powerful gather for their annual meeting in Switzerland.  Last year the head of JP Morgan was applauded by his peers for his plea for an end to banker bashing; this year – after the Occupy movement has swept the world – no-one would be so bold.

To quote the BBC’s business editor Robert Peston:

The governor of the Bank of England, Mervyn King, caught the mood yesterday when he pointed to the perceived unfairness that it was the well-heeled bankers who caused the mess we’re in, but it’s those on average and below-average incomes who are paying the price.

Even relatively mainstream economists are questioning the consensus of the past 30 odd years which said that the only way to grow the cake for all is to incentivise the great wealth creators by allowing them to have more and more of that cake

So what’s happening locally?

John Key’s National seems committed to discredited trickle-down theory.  Indeed even National’s new MPs aren’t onto new economic thinking; from Maggie Barry’s “we must look after the rich [as they pay our taxes]” when asked about income inequality, to Mike Sabin’s comfort in letting school children starve pour encourager les autres.

It seems it’s not just our business CEOs but also our council CEOs that are taking the mickey, as well as the money with double-digit pay rises in straitened times.  They’re getting pay rises bigger than their average employee earns in a year – there’s none of the UK’s rules to restrict public sector pay below the Prime Minister’s here (and our Prime Minister earns more than his UK counterpart too…).

But some outside the left are taking the message on board.

Closing the Gap aims to be an apolitical organisation pushing the message of Richard Wilkinson and Kate Pickett (authors of The Spirit Level) in Aotearoa.

Their aim is:

to raise public awareness of the benefits of a more equal society to such a level that our leaders take notice and act.

I’m hoping they do well, as income inequality is one of the major issues of our time.  It is a major driver behind child poverty, which will shape the future of our nation.  It lessen our democratic values as some get less of a go than others.  It affects the very trust that bonds us together as a society.

I’m signing on with them – and I reckon you should too.

31 comments on “Closing the Gap: who’s listening? ”

  1. Gosman 2

    The Spirit level is hardly good science. It is apparently regarded as rather shabby by many epidemiologists mainly because of the failure to exclude outliers.

    • McFlock 2.1

      It is popular science. It illustrates what is known, in really big letters, in the context of the real world. If you want to examine the “good” science, maybe you should look up their source documents. 
       
      On its worst day, “The Spirit Level” is better science than most economics “research” (read “fantasy”) printed today.

    • One Anonymous Bloke 2.2

      Gosman, how would you know? Link to someone credible, because you certainly aren’t.

      • aerobubble 2.2.1

        Smart losers know they can’t win so they change the rules. In the internet world that’s a troll.
        In the real world that the speculator classes who think that if they just keep changing or removing the rules they will come out on top.
        They aren’t so smart after all.

    • Frank Hanlon 2.3

      The accusations of poor science are old news and have been answered fully on the website http://www.equalitytrust.org.uk

    • The sample is countries though, so it’s a different order of business excluding outliers there as outliers are essentially an aggregate of an enormous amount of data, and there may be significance to the fact of their outlying, unlike models where each data point is an individual datum that is likely of equal importance to all the others, when analysing a country there are a lot of complex factors that can’t be analysed quite so easily, so it is important to include outliers and discuss what may or may not be significant about their outlying.

      • Ah yes, here we are, I was curious so I’ve been reading through these rebuttals, and I found the example you’re talking about.

        On outliers, the rebuttal you want is here:
        http://www.equalitytrust.org.uk/docs/hughnobletslrevisited.pdf
        It starts halfway through page eighteen.

        To sum up the metaphor for people who don’t want to download and read the pdf:
        The drawing of conclusions from sample groups of data is sort of like taking measurements of mountains. In our analogy, one sample group is a mountain. The correct situation to remove outliers is when you’re trying to determine the height of a single mountain, and get six measurements, with one much taller outlier. You discard it as it is likely due any number of small mistakes you could have made- from reversing a set of digits when writing down a number to adding a cloud to the height of the mountain by accident.

        The next part of the analogy talks about taking measurements once each from dozens of mountains in the Himalaya range. The measurements are broadly similar (because the range is shaped by similar geographical forces) and tend to lie within 6,000-7,000 feet. But at about 29,000 feet, is Mt. Everest an outlier? Well, no, not without further checks, because you’re measuring different mountains. There are causes and drivers of those causes as to why Mt. Everest is so much higher than the rest of the Himalayas, and back to the graphs of the Spirit Level, the USA, Singapore, Japan, and other anomalous countries may be anomalous for reasons that support the Spirit Level’s conclusions.

        But that’s still not analogous to the Spirit Level- in their data, it’s more like you got a measurement of three or four mountains at the foothills and of measurement of Mount Everest, and are trying to determine a trend in the slope of the Himalayas. You can see that, assuming Everest was indeed measured correctly, there is a strong upward trend in that direction. You can’t tell whether it’s linear or curved due to a lack of intermediate data points, but you know the trend exists if you can confirm that Everest is indeed that tall or even close to being that tall, and with some careful analysis of the geological environment nearby, we could determine why.

        There are bound to be other causes of social ills in the USA than just inequality- the question is: Which are also caused by inequality too…
        (for instance, controlling for race demographics can weaken the trend, but that’s because white and black americans experience different amounts of inequality, and because even controlling for income, being black is sadly an inequality of status of itself in the USA at the moment)

        …and which aren’t. (for instance, nonrestrictive gun laws and gun ownership are likely to increase homocide rates, but there are also very equal societies with these characteristics)

    • mik e 2.5

      Groseman The OECD has researched the Gap and come to the same conclusion.

  2. Tamati 3

    Can someone please explain how someone sitting in a boardroom miles away from average wage job affects my well being. I mean, how can he getting a pay rise effect my livelyhood?

    Of course it makes sense that if the poor were richer then we would all be better off, but if the rich were less rich, how does this benifit anyone?

    • Colonial Viper 3.1

      Capital extraction by corporations and large business owners takes wealth directly out of local communities, expatriating it to foreign shareholders, or hoarding it in a small proportion of the already wealthy.

      but if the rich were less rich, how does this benifit anyone?

      it would only benefit the community if the financial capital being hoarded by the wealthy was spent back into local circulation to increase worker incomes and the activity of every day commerce.

    • Bunji 3.2

      Read the book… Although to be fair their research is largely the analysis of statistics that say it does more than the reasons why.

      Apart from the obvious that the bigger slices of pie grabbed by the top few mean less pie for the rest of us (history says the pie has grown much slower under neo-liberal economics than previously), it also results in much less social mobility – he’s able to give his children every advantage that yours don’t get.

      Poor social mobility results in many things, including a massive waste of talent. If you’re struggling to feed yourself, you’re not setting up a business with your entrepreneurial skills and the necessary seed money. You likely give up trying to get ahead – go on the dole, or commit crime, or just look for instant pleasures like drugs & sex – leading to high teen pregnancy rates. You’re stressed, you can’t afford proper health care – your physical and mental health declines.

      Meanwhile the rich have much further to fall, so they’re stressed too, protecting what they’ve got. Their mental health isn’t great as they create panic rooms in high security gated ghettos. Both sides lose empathy for the other, trust is broken down, and as Maggie Thatcher’s prophesy comes true: “There is no such thing as society.”

      That and much more, we’re all very inter-related complex funny things, us humans. No man is an island – I read that somewhere.

    • McFlock 3.3

      Because if the CEO is getting 15 times the income of the workers, and the stockholders’ return on investment is constant, then a reduction in the CEO income is shared out among the workers. 
       
      It affects you personally because boosting the size of the middle class by lifting people out of working poverty is excelent for consumption and the circulation of money throughout the economy. 
       
      Luxury expenditure is a bit like an eddy in a stream – it tends to circulate around other rich people and doesn’t flow through the rest of the economy, because money is attracted to money. By injecting money throughout the economy, the money flows through more sectors of society than just tumbling around the Auckland CBD. The CBD serves important functions in the economy (particularly around investment in enterprises), but it isn’t the be-all and end-all of NZ.

    • Uturn 3.4

      Last time I looked, those of a certain salary and social position are far more likely to influence the politics of a country than your average low wage earner. Beautiful people are rich and everyone wants to listen to rich beautiful people, even if they’re selling snake oil and especially if they tell people they can be just as rich as them if only they believe it. So Chairman X has the ear of MPs and politicians, whereas Street vendor Y, does not. Now Chairman X has one thing on his mind, bettering his lifestyle and staying in a position of control. He’ll do this in any way and at any cost, especially at the cost of people he’ll never meet – like Street vendor Y. How Chairman X gets his money and makes his profit will effect you; either environmentally via resource use or by your wage being reduced, or even by you being laid off. Is any of this ringing bells for you? It’s a simple join the dots exercise. Not so surprisingly, it matters not at all whether Chairman X is of Left or Right political orientation.

      On top of that, Chairman X has as many faults as the next man, but he doesn’t have to face quite so many, because while money can’t buy you happiness, surprisingly it can be used to drown out the sound of your own insanity. This is the point at which social politics starts getting nasty and that effects many people, maybe even you directly. In short, no one is an island and nothing happens in a vacuum. Just because the ship you see on the horizon is small, doesn’t mean the marines it carries won’t be effective once they land on your beaches. Or how about this… if enough trees fall in the forest and everyone lives in the city and X Factor is on TV, (so they don’t notice the trees falliing) is the forest getting larger or smaller?

      Your next question gives away your perspective – as a troll. No the world would not be any better if the poor were rich. Redistribution of wealth is not the hallmark of the Left or even a solution. It’s a stop-gap that usually turns into a game of switching seats while the status quo remains. Labour’s (and to be fair, the rest of the Left in NZ) current leadership is playing this game right now. Obama plays it too. There’s sweet f -all people actually need, and the rest is waste and pollution and compensations for ignoring aspects of humanity that are messy, dangerous and important. The current 1% have destroyed enough of the world and encouraged the on-going damage to new generations so effectively that bringing the other 99% in on the same act would be environmentally and socially catastrophic. Politics is not the path forward for humanity, it is just an indicator of human progress.

      Thank you for your statements dressed as questions and please direct all further statements to this website: http://www.troll_blackhole.com

    • Draco T Bastard 3.5

      The economy is a zero sum game. More of current period GDP going to a few people really does mean less going to everyone else. It also means, due to interest and other contrived means of wealth accumulation, that in the next GDP period even more will go to those few who have and less to the many.

      Simply put, them having more means that you have less.

      Then, when we start talking about the real economy rather than the delusional one that the economists propagate it gets even worse as those few actually control the resources needed for you to live.

    • Frank Hanlon 3.6

      Read the spirit level The more unequal the country is the worse the statistics are relating to morbidity, imprisonment, mental health, ill health and general social dysfunction for everyone.

  3. randal 4

    it is proven without doubt that a high wage economy is synonomous with high rates of unionisation.
    only in NZ is the idea current that wages will rise if unions are smashed.
    if they swallow kweewee then they will swallow anything.

  4. bbfloyd 5

    all this arguing over relativity is fine as it goes, but i have to say that, to the majority of people i know, this is no more than the nobs stealing the money us peasants took from them over the last couple of centuries……

    the bonus for them is that they have been able to do it by squeezing the golden goose over a century of wealth redistribution has created…..utilising a program of instilling personal greed, and ambition to gain the acquiescence of the middle, and artisan classes in order to carry out this grand plan without serious impediments along the way….

    to say it has been wildly successful is an understatement…..to say that there is no plan other than locking up the side effects of this removal of our ability to evolve in a healthy way would also be an understatement…..

    we should be pitying the likes of gosman et al, as they display their victim mentality for all to see….they will be the ones most hurt by the reality crashing in on their world view in the brutal manner that it inevitably will… nothing new here.. just another false start destined to fail for the same reasons as always….. our inability to submerge our personal self interests for long enough to allow the evolutionary process to develop past the first menopausal stage……

    which, of course would render our childish concepts of self largely redundant…..that’s what happens when maturity comes about….being able to see the the parts that make up the whole clearly(and understanding how important each individual stream is) is what is missing at present…..we have innumerable examples in the world all around us of just how interconnected every part of any ecosystem is, and how quickly that ecosystem breaks down once the balance has been altered…..

    welcome to the results of the latest lurch boys and girls….

  5. Royton De'Ath 6

    Ahh, Gansmann, you are a delight to Us. Your reflexive reactionary responses to certain stimulii are a credit to the unquestioning acceptance of the specious-arguments training you have received.

    We are particularly pleased with your air of gravitas when critically “analysing” – if we can use such a grand term for voiding your psyche as you do – science, and We note the placing of your capacity and credentials to distinguish between “good” and ‘bad” science in the public domain is a heroic act, given the actual state of those “attributes”. But, of course, this is of no import to one such as yourself.

    Of course, the diversion of attention towards the “many epidemiologists” who have grave doubts about the “ouliers” is a master-stroke. The appeal to authority, and the servility that should induce, is just so mindlessly authoritarian. Well done. Can you please “showcase” the doubts about the “science” in The Spirit Level expressed by hordes of metrologists, mobs of etymologists and masses of urologists too?

    But, do not, under any circumstances, let people know of the disciplinary distinctions between social epidemiology (where W & P operate) and that of disease and non-disease epidemiology. If you do your already tenuous standing would, sadly for you, become totally untenable.

    Wilkinson & Pickett have defended the statistical bases of their Devil’s Work very ably, we understand (some people have actually read the critiques and authorial responses!). It appears that one of the more trenchant criticisms of their work is its lack of adequate attention to class stratification (Goldthorpe, 2009). Damn these people! We cannot have a class-based analysis applied to this Devil’s Work. What would happen next? A greater degree of attention on Our (legitimate, of course!) rapacity? And, in consequence, more demands for equality and emancipation?

    (By the way, we noted that your extremely tiny piece did not get the response it should have got in the comments section. We may have to discuss your usefulness to Us if you can’t do better. You know the price of non-performance).

  6. foreign waka 7

    Income inequality is a recurring issue chewed through since the industrial revolution. All that seem to happen is that the distribution of income relative to the people receiving it is getting thinner and spread wider. Now, taking inflation into consideration that can only mean that we are being constantly hoodwinked and the “fairer” distribution is in a cynical way an illusion as the spoils of the hard work is just divid up at the same ratio.The top 20% has enjoyed the growth and the 80% on the other end have to share what is left. The new trend is that the taxpayer funded government officials are getting increases the leaves one breathless for comment and the receiver feels that he/she have an ENTITLEMENT to the money! These are the same people who will tell a person with a minimum wage to reduce expenditure, cut down on “non essentials” etc. It looks to me that we have a Renaissance of the yesteryear 14th century. Waiting for Robin Hood…..

  7. M Schwartz 8

    ***Anybody who has read, or even heard of, The Spirit Level knows that science is finding links between income inequality and the health of the society we live in – and the health of its citizens among other things.***

    Unfortunately, the claims in that book do not stand up to scrutiny. I would recommend you read criticisms by economist Tino Sanandaji*, or the book “The Spirit Level Delusion”. It seems that the authors of the Spirit Level tend to omit countries which contradict their hypothesis. For instance, Singapore and Hong Kong have the highest income inequality in the developed world, but have low rates of crime, infant mortality and most other health and social problems.

    http://super-economy.blogspot.com/2010/02/spirit-level-is-junk-science.html

    http://super-economy.blogspot.com/2010/02/spirit-level-is-junk-science-part-deux.html

    • RedLogix 8.1

      I would recommend you read criticisms by economist Tino Sanandaji*, or the book “The Spirit Level Delusion”.

      Yes we have. They’ve been debated here on and off for ages. There really are only three possible hypothesis:

      1. Inequality is bad for social outcomes

      2. Inequality has no effect on social outcomes

      3. Inequality is good for social outcomes.

      Right now inequality in generally is very high across the whole world, and when we examine the social outcomes it’s very hard to argue for a good result. This makes the second and third hypothesis rather hard to support by simple direct observation.

  8. M Schwartz 9

    @ Frank Hanlon,

    Thank you for the link with responses from Wilkinson & Pickket. May I ask have you looked at the critics response to the answers? I think you should keep an open mind 🙂

    http://super-economy.blogspot.com/2010/07/spirit-level-writers-caught-lying.html

    http://www.taxpayersalliance.com/spirit-level-debate-summary#questions

    • just saying 9.1

      Are you keeping an open mind M Schwartz?

    • One Anonymous Bloke 9.2

      “There is thus zero evidence in this paper (or anywhere else in professor Heckman’s seminal work) supporting Wilkinson and Pickett’s claim that other people having a higher income is bad for you.”

      What a load of gobshite. Is this feeble crud the best you can do?

      Here is a more balanced look at Prof. Heckman’s work for anyone who’s interested. He’s very keen on evidence based policy.

      Heckman’s work is widely cited in this context by other authors than Wilkinson and Pickett, but you, Schwartz, got taken in by a blogger. Pathetic.

      We need better wingnuts.

    • Frank Hanlon 9.3

      The blogger is entitled to present their opinion, but the spirit level is based on decades of research subject to stringent examination. All their analyses have been either replicated by other researchers or published in peer reviewed journals, and are fully referenced. What can mr. super-economy present to support his points.

  9. Bunnykinz 10

    Not too sure if anyone else noticed, but I found it amusing that David Cameron had invited
    Mick Jagger along for a cuppa at Davos , but Sir Jagger objects to being used as a political football.

    I thought it was interesting that DavCam decided to invide along a very famous tax avoider (apologies for using the Daily Mail!), one of whose most famous albums was recorded during his previous period of tax exile.

  10. I’d say John Key has not been listening because it is not in his plans for NZ.

    John Key’s plans for NZ are becoming more obvious by the day, selling farms to the Chinese so get a foot in the door and obtain more land and build their mega factories where live animals go in one end and goods ready for market come out the other end.

    John Keys vision of a low wage economy will sit very nicely with the Chinese mega factories, no worries that the wages paid is not sufficient for a family to live on, John and his boys don’t want to know that after all NACT thinking is if you are a manual worker then you are there to keep your country working and other than that we don’t give a rats arse about you.

  11. Karl Sinclair 12

    Hey Johnny Boy……

    UN:
    Health and education must improve, it says. Subsidies on fossil fuels should end, and governments must look beyond the standard economic indicator of GDP.

    Say no more….

    Your a fossil……..

    http://www.bbc.co.uk/news/science-environment-16775264

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