Inequality Aspiration Envy

Written By: - Date published: 11:04 am, May 19th, 2010 - 71 comments
Categories: budget 2010, capitalism, class war, equality, john key, national, Social issues - Tags: , , ,

Inequality

Inequality is immensely damaging to society. Over a huge range of important social indicators, the more unequal a society is, the sicker it is. The case is best made by a book called “The Spirit Level”, and by the organisation behind it, The Equality Trust. Here’s the case in summary:

Why More Equality?
Our thirty years research shows that:

1) In rich countries, a smaller gap between rich and poor means a happier, healthier, and more successful population. Just look at the US, the UK, Portugal, and New Zealand in the top right of this graph, doing much worse than Japan, Sweden or Norway in the bottom left.

2) Meanwhile, more economic growth will NOT lead to a happier, healthier, or more successful population. In fact, there is no relation between income per head and social well-being in rich countries.

3) If the UK were more equal, we’d be better off as a population. For example, the evidence suggests that if we halved inequality here:

– Murder rates would halve
– Mental illness would reduce by two thirds
– Obesity would halve
– Imprisonment would reduce by 80%
– Teen births would reduce by 80%
– Levels of trust would increase by 85%

4) It’s not just poor people who do better. The evidence suggests people all the way up would benefit, although it’s true that the poorest would gain the most.

5) These findings hold true, whether you look across developed nations, or across the 50 states of the USA.

For more details see the evidence page: “Details of the data and statistical techniques we use are available on the Statistical Sources and Methods page and the international dataset can be downloaded here.”

Phil Twyford wrote on this research at Red Alert. I think it’s fair to say that an understanding of these facts is in our DNA here at The Standard. And the Greens just released an entire alternative budget based on an understanding of the damage caused by inequality.

It is shocking to me that New Zealand has such high levels of inequality and such high levels of social problems. The last Labour government had begun to turn it around at last (according to the Ministry for Social Development and the OECD). In their budget tomorrow National are set to go back to the old ways, and deliberately widen the gap.

Aspiration

Tory governments have only one tiny fig leaf to hide behind when nakedly redistributing wealth from the poor to the rich. That fig leaf is the “aspiration” argument:

‘Finance Minister Bill English today confirmed Budget 2010 will be delivered on May 20 and will set out important policies to lift economic growth and give hard-working New Zealanders incentives to get ahead’

Making the rich richer is supposed to give the rest of us, the huge majority, “incentives”. It will make us aspire to work harder and get ahead. I’ve written on this before. This argument supposes that all we hard-working New Zealanders don’t currently have enough incentive to get ahead. We just work hard every day for the hell of it I guess. But suddenly some how the knowledge that those on huge incomes will pay a few percent less in taxes will suddenly fire up the ‘get ahead’ spirit that we had previously been lacking, and we will all go out and work even harder, or suddenly have brilliant ideas, found companies, and all become millionaire CEOs in a nation where no one cleans the toilets. Hurrah!

This argument is absurd. It’s bollocks. We have aspiration already. We have incentives already. We’re hard-working already. Capitalism depends on a supply of cheap labour and most people will never be rich. Knocking a few percent off the taxes for the rich won’t change any of these facts. What it will do is give more money to those who don’t need it by taking it from the poor. There’s no honest way to justify such robbery, so it’s hidden behind the flimsiest nonsense about “aspiration”. How do they get away with it?

Envy

But National’s story gets even more incoherent. As the country wakes up to the nature of this budget for the rich, the Nats are getting nervous. Key is telling us not to be jealous, to avoid the sin of envy:

We can be envious about these things but without those people in our economy all the rest of us will either have less people paying tax or fundamentally less services that they provide

So, how are envy and aspiration different in end effect? Both are based on wanting what we don’t have. On the one hand we are being told that we’re giving more to the rich to give us all incentives to get ahead, and on the other hand we’re being told that we shouldn’t want their wealth. Aspiration Good Envy Bad. So are we supposed to want what we don’t have or not? National – which is it?

Conclusion

National’s profoundly confused messages and “aspirational” arguments for rich tax cuts make no sense at any level. We’re already motivated to work hard, we already want to get ahead, tax cuts don’t change that. If making the rich richer was good for society then all the inequality indicators at the start of this post would point the other way. But they don’t. Increasing the gap between rich and poor is bad for society, not good.

The aspirational figleaf is in tatters and the naked redistribution of wealth is revealed. The Nats are about what they have always been about, making the rich richer at the expense of the poor.

71 comments on “Inequality Aspiration Envy ”

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  1. pollywog 1
    19 May 2010 at 11:30 am

    Get rich or die tryin…if you can’t beat ’em, you have no choice but to try to join ’em by whatever means neccessary. The wages of sin is rewarded by gov’t.

    It’s the unavoidable bright future we should aspire to and work towards if we wish to survive and prosper in the world.

    How do they get away with it?

    Natural selection. Nature selects for the greedy and the selfish. Survival of the fittest means survival of the richest. It’s evolution and you cant fuck with that. The inequality gap is the evolutionary gap between homo superior and homo saps.

    The message is, if you dont want to be a greedy selfish fatcat then you dont deserve to live (here) and we (the gov’t) will punish you for it…being poor in a land of opportunity is a crime.

    • Bored 1.1
      19 May 2010 at 12:02 pm

      You have them by the balls Pwog, bit of social Darwinism in every “rich prick”…The end result for the likes of Hotchin are interesting…he is too scared to leave a bland high end tropical security gated prison of his own chosing, and he pays a lot of cash for that. Darwin Award there for stupidest holiday possible (though at the expense of others, perhaps some more Darwins for those aspirational investors who gave him the cash). Thorstein Veblen would have loved this, as would have Robespierre in a different way.

  2. ianmac 2
    19 May 2010 at 11:32 am

    The very rich work very hard to earn heaps of money because they have a burning desire to aid society with payment in taxes and by donating soup kitchens for the destitute. They, like John Key are rilly rilly good people. It is simply not true that many hide their income in trusts and tax right-offs to avoid paying income tax. Tis just envy to suggest this! Shame on you.

    • DeepRed 2.1
      19 May 2010 at 10:20 pm

      Somehow that works out a lot better in a darkened auditorium with a giant projector screen showing a smile & wave.

  3. mickysavage 3
    19 May 2010 at 11:36 am

    I accept the premise that societies where the wealth is spread more unevenly perform worse and am interested in why this should be the case.

    I have thought for a long time that most kiwis material wealth is fine and we actually do not need more. Too much rather than not enough food is a problem. Aspiration seems to relate to a bigger car or a second flat screen.

    The reason that an unfair society does not work I think is primarily for three reasons:

    1. Work life balance is shot to pieces. Average workers have to work for too long to provide for themselves and their families.
    2. There is a resentment at the totally selfish behaviour shown by the wealthiest. Hotchin’s recent antics are an example of this.
    3. A society dominated by the idea that the market should judge is less compassionate and more brutal than a society where the desire to make sure that everyone is looked after forms part of the decision making process.

    If you wanted to boil it down to a simple proposition perhaps more balanced societies perform better because they are more compassionate.

    • Olwyn 3.1
      19 May 2010 at 2:40 pm

      I suspect that unequal societies also render those with the means more risk averse, since there are fewer floors between the penthouse and the basement if you fall. Hence there is an impulse to hang onto and accumulate easily gained wealth (land and ex-public assets) rather than do anything productive or creative. If this is true, then inequality is bad for the economy, along with everything else. But it’s good for a small number of people who would cheerfully let the world go to hell in a handcart if they can just get their 15 minutes of feeling superior to others.

  4. Bored 4
    19 May 2010 at 11:42 am

    I get accused of envy every time I mention some form of equality ..bit sick really considering my personal circumstances are somewhat better than most. I don’t aspire to more; I have got plenty more than I really need. Having said that we do need to get to grips with envy and aspiration.

    I tried putting it through 180 degrees, and the result is interesting. The rich may well be the really envious ones; I suspect this motivates them to chase one another (keep up with the Jones) and stokes their psychotic need to be “better’ than the rest of us. This they argue results in “progress’ for all, it is their self serving actions that give us all benefit. The co-operational model has not occurred to them as probably more motivational and effective.

    The aspiration bit was interesting too when inverted, the right want us to aspire only for ourselves. It’s personal they say. The news is however (as the case studies you use demonstrate) is that aspiration for the group easily trumps the individual, even down to individual benefit. The left need to promote our own version of “aspiration’.

    • Pascal's bookie 4.1
      19 May 2010 at 12:24 pm

      “The rich may well be the really envious ones;”

      http://en.wikipedia.org/wiki/Lucky_duckies

      Who are these lucky duckies? They are the beneficiaries of tax policies that have expanded the personal exemption and standard deduction and targeted certain voter groups by introducing a welter of tax credits for things like child care and education. When these escape hatches are figured against income, the result is either a zero liability or a liability that represents a tiny percentage of income…
      …Say a person earns $12,000. After subtracting the personal exemption, the standard deduction and assuming no tax credits, then applying the 10% rate of the lowest bracket, the person ends up paying a little less than 4% of income in taxes. It ain’t peanuts, but not enough to get his or her blood boiling with tax rage

      A Wall St Journal editorial

      I will spend a year as a Wall Street Journal editor, while one lucky editor will spend a year in my underpaid shoes. I will receive an editor’s salary, and suffer the outrage of paying federal income tax on that salary. The fortunate editor, on the other hand, will enjoy a relatively small federal income tax burden, as well as these other perks of near poverty: the gustatory delights of a diet rich in black beans, pinto beans, navy beans, chickpeas and, for a little variety, lentils; the thrill of scrambling to pay the rent or make the mortgage; the salutary effects of having no paid sick days; the slow satisfaction of saving up for months for a trip to the dentist; and the civic pride of knowing that, even as a lucky ducky, you still pay a third or more of your gross income in income taxes, payroll taxes, sales taxes and property taxes

      A response from a reader

    • Lew 4.2
      19 May 2010 at 12:33 pm

      Bored, as Cactus Kate would say, stop ruining it for others. You got yours. Why should you care about those who are too useless to get theirs?

      Bloody pinkos. Etc.

      L

      • Bored 4.2.1
        19 May 2010 at 3:40 pm

        Thanks Lew, its hard being a pinko. Must be my Judeao Christian ethical heritage…’there but by the grace of God go I”…and I am not even religious.

    • DeepRed 4.3
      19 May 2010 at 10:24 pm

      “The left need to promote our own version of “aspiration’.

      We already have a term for it – it’s called the “ladder of opportunity”. We need to pick it up and run with it, not pull it up so others can’t climb it. (pun fully intended)

  5. Croc 5
    19 May 2010 at 11:47 am

    Please don’t use the phrase ‘survival of the fittest” in this context. It’s misleading.

    “The phrase “survival of the fittest” is not generally used by modern biologists as it does not convey the complex nature of natural selection, so they prefer and almost exclusively use the latter term (natural selection). Survival is only one component of selection. For example, where a number of males survive to reproductive age, yet only a few ever mate, the difference in reproductive success would stem from factors other than the ability to survive, such as an ability to successfully attract mates. In an evolutionary reproductive sense, fitness is the average reproductive output of a class of genetic variants in a gene pool, and should not be confused with meaning physically fit – biggest, fastest or strongest – and which does not necessarily lead to reproductive success”

    http://en.wikipedia.org/wiki/Survival_of_the_fittest

    • pollywog 5.1
      19 May 2010 at 4:19 pm

      jeez Croc…you’re a bit of a dry balls stickler for correct terms of reference aren’t ya ? I’m sure you get the gist of what i meant but whatevs, if it makes you feel better, i wont try and mislead you anymore…sweet ?

      • Croc 5.1.1
        20 May 2010 at 1:03 pm

        Perhaps, but “survival of the fittest” has long been a term used by Adam Smith’s to justify aggressive economic policies that destroy the lives of the poor in the name of ‘economic progress’. It makes me cringe to see it used in this context, even as satire. As you were.

  6. Pete 6
    19 May 2010 at 12:05 pm

    “The left need to promote our own version of “aspiration’.”

    Agreed. Though this should rightly be framed up around equality – and the benefits that a more equal society has on all levels of said society (though NEVER use the word ‘benefit’ – red rag to a bull).

    IMO the Greens have the best idea of this (Meteria framed her panel discussion on the Budget like this on Q+A in the weekend just gone, for example) – but they need to work on appealing more to an ADD public with shorter and shorter attention spans. That, and work on their image which is still considered (by far too many) as ‘hippies’, ‘commies’, ‘druggies’ and ‘the smacking police’ (though more often than not this aspect is attributed to Labour – go figure).

    R0B – thanks for the post – While I was reading it I was trying to think of evidence-based examples of neo-liberalism (especially some kind of similar long-term studies) that have proved, without any doubt, that the way of Douglas, Key et al WILL actually serve the NZ population in the way they seem to strongly believe it will. I’d really like to see that, so we can really do a weighing and balancing of facts vs facts… Anyway, made my day.

  7. ianmac 7
    19 May 2010 at 12:15 pm

    I was talking to my sister the other day and trying to explain why I did not aspire to wealth in that I thought that wealth would corrupt my life in various ways. Standing behind me was a relative who has become many millions wealthy (software) and I could hear him muttering to himself. “Thats for real. Me too.” I did not let on that I heard him. I do believe that he is rather lonely as there is little reason for him to work and his kids go to an expensive private school and they want for nothing.
    Envy? How about pity?

  8. Rimu 8
    19 May 2010 at 12:19 pm

    The Greens have been banging this drum for a while http://blog.greens.org.nz/tag/inequality/

  9. Fisiani 9
    19 May 2010 at 1:26 pm

    This Budget is about giving people back some of their own money that they have been deliberately overtaxed by Labour for 9 long years/. Those that have been fleeced the most are owed the most. This is not about taking money from the poor. It is simple about righting wrongs. Get some lessons in logic.

    • Rimu 9.1
      19 May 2010 at 1:31 pm

      Oh well, if we’re going to stoop to insults…

      Get some lessons in grammer and reading comprehension.

    • Mac1 9.2
      19 May 2010 at 1:55 pm

      Fisiani, yes, it’s about righting wrongs and making sure that those who are ‘fleeced’ are repaid.

      The question is who in our society is being fleeced and what is being done by this government to rectify this? For example, Hanover clients, owners of leaky homes, underpaid workers, Southland coal miners, guest workers in the wine industry, buyers of petrol from oil cartels, the exploited, the poorly housed, those who are sick from industrial waste and pollution, communities bearing the burden of defunct tanalising mills waste ground.

      Fisiani, the list is very long and many could add to it. Somehow I believe that you will not convince me that your list of ‘deserving’ is more important, let alone’ deserving’, no matter what John Key might say.

      Then there are those who have been promised what has not eventuated. There are those who have been promised what would not happen but which is going to. The Budget will add to these lists tomorrow.

      The Great Shearer from Dipton will bring a chilly winter for many who will have been fleeced.

    • nzfp 9.3
      19 May 2010 at 5:31 pm

      “Toi tu te whenua” Fisiani, the land was here before we arrived and it will be here after we leave, I agree with you, move the tax burden off labour onto what is provided freely by nature – land! Tax the land owners and banks that capitialize rent with a revenue neutral tax swap and capture the tax on resource rent. Land tax cannot be passed to renters.

  10. Anita 10
    19 May 2010 at 1:38 pm

    r0b,

    I was interested to see that Australia shows more income inequality yet scored better on social problems that NZ, in fact it’s quite a long way off the trend line. Did you happen to have (or have read) a hypothesis for the cause of that?

    • r0b 10.1
      19 May 2010 at 3:04 pm

      Hi Anita. No, I haven’t read anything about Oz specifically. Given the imprecision in data reporting collection and interpretation, I expect that every point on that graph is pretty fuzzy, and the location of Australia is well within the margin of error.

  11. Policy Parrot 11
    19 May 2010 at 1:39 pm

    This whole concept of tax envy is reversed. It is the wealthy that are jealous of the poor, at the low average tax rate that they pay. I can see many of them slaving away over their Excel spreadsheets now, trying to work out how much more they will get from Triple Dipton.

    Triple Dipton is apt on another level, considering that taxpayers on $70k + are envisaged to reap the benefits of three seperate changes in threshold/marginal rates. The only way regular folk can be like the Finance Minister is to play Lotto – Triple Dip (Lotto, Strike, and Powerball).

  12. Eric Crampton 12
    19 May 2010 at 1:45 pm

    Do note the rather trenchant critique of The Spirit Level raised by Chris Snowdon. Spirit Level does a lot of cherry-picking of countries and years to make its graphs look the way it wants them to. Adjusting things slightly makes the effects disappear. See here.

    And, Andrew Leigh, hardly anybody’s vision of a hard core right wing economist, also debunks the inequality-health links here. Effects seen in the cross-section disappear in the within-country time series.

    • Bright Red 12.1
      19 May 2010 at 2:08 pm

      yeah Eric. The US is the model of a successful society, whereas Sweden, Denmark, Finland etc are hell-holes with high crime and millions of homeless where a privileged few live in opulence.

      Wait, I think I got that the wrong way round…

    • NickS 12.2
      19 May 2010 at 2:24 pm

      Oh yay, although the author really should make something like Kare Fog’s Lomborg Errors site, because having a handy online resource is much easier than buying a book.

      Anyhow, there is one meta-analysis paper I looked at in the links on Leigh’s blog on this, that notes links between inequality and public health, via self-reported health stats :
      http://www.bmj.com/cgi/reprint/339/nov10_2/b4471

      There’s also a recent paper citing the above looking at TB in Latin America and how it is influenced by inequality and GDP growth.

      Rather interesting stuff, nowhere near as fun as ecology and evolutionary biology though 😛

    • r0b 12.3
      19 May 2010 at 2:32 pm

      Is this the same Chris Snowdon who has written a book on smoking, claiming that the anti-smoking movement is (according to reviewers) “Puritanism disguised as science”? You’ll beg my pardon if I have a certain instinctive distrust.

      The Spirit Level authors couldn’t have reviewed every country, they reviewed countries for which they had the data – it’s all listed on their methods page. Anything short of every country in the world would have led to claims of “cherry picking” by those who wanted to deny the message. And the fact that the same trend holds (more weakly) over 50 states in America? That can’t be cherry picking too.

      There is plenty of academic and international research on the links between inequality and various health and social indicators. Browse away. Or start with something NZ based.

  13. Eric Crampton 13
    19 May 2010 at 2:40 pm

    @Bright: Note that I didn’t, of course, make that claim. Just that the nice straight upwards line goes away under a more comprehensive selection of country-years.
    @Nick: Will have to read those; thanks. I’d also really want those kinds of studies to be correcting for other kinds of heterogeneity. Suppose, for example, that the US has a big increase in inequality due to a lot of poor folks migrating in from Mexico. They have worse health outcomes than other folks in the states, but it’s the difference in cohort makeup that’s generated the overall health effects, not the change in inequality.
    @R0b: Same Snowdon, yes. I happen to agree with him on anti-smoking (I don’t smoke). Just wait ’till my OIA on MoH’s latest burp on fiscal costs of smoking comes through…. Snowdon claims that Spirit Level didn’t just pick country-years based on data availability; rather, data points that appear in some of their work disappear in other parts of their work, and that patterns of missing points happen to coincide very suspiciously with those points that would blow up their nice straight lines. He could be wrong: I’ve not fact checked him. But it’s enough for me not to take Spirit Level at face value.

    • r0b 13.1
      19 May 2010 at 2:46 pm

      See my comment 12.3 above. I reviewed The Spirit Level work because it is one tidy package well presented, but the link between inequality and damaging indicators is widely supported by any number of studies.

      • Eric Crampton 13.1.1
        19 May 2010 at 2:50 pm

        I totally buy that poor folks have worse health outcomes than richer folks. But, I don’t know how much of that is due to relative deprivation as compared to underlying factors that cause both low individual income and adverse health outcomes. See Linda Gottfredson’s work for starters.

        • r0b 13.1.1.1
          19 May 2010 at 3:02 pm

          And what are these “underlying factors that cause both low individual income and adverse health outcomes” Eric? Do tell.

          • Anita 13.1.1.1.1
            19 May 2010 at 3:11 pm

            Plenty of chronic health conditions will cause both lower income and a wider range of poor health outcomes. I’m not sure this is what Eric was suggesting tho, but there is definitely causal links in both directions between poor health and poverty, not to mention other factors which can result in both.

            • r0b 13.1.1.1.1.1
              19 May 2010 at 3:25 pm

              Of course there are some specific effects like this. Large enough to explain the large scale differences that we see in the research linked to above? No. What Eric really meant was IQ, and I’m glad that he just came right out and said it in 14.

              • Eric Crampton …
                19 May 2010 at 3:31 pm

                Oops, I hit the wrong reply button and wound up at 14 rather than 13.1111111111111; apologies.

                I don’t see any reason not to point to individual differences in underlying characteristics like intelligence, conscientiousness, or risk-preference as potentially giving rise to differences in social outcomes. Gottfredson’s work is on IQ, but it’s just as plausible to me that other personality characteristics also come in rather importantly.

                [I have replied to your 14 below –r0b]

              • Anita …
                19 May 2010 at 3:44 pm

                Is someone arguing that stupid people are less healthy simply because they’re stupid? Really?

    • NickS 13.2
      19 May 2010 at 3:46 pm

      . Suppose, for example, that the US has a big increase in inequality due to a lot of poor folks migrating in from Mexico. They have worse health outcomes than other folks in the states, but it’s the difference in cohort makeup that’s generated the overall health effects, not the change in inequality.

      Except of course you need to know the leverage these immigrants exert on health statistics, which given the current levels of health care for poor and the the mid to lower middle class, the rather obvious hull hypothesis is that they don’t at the federal level, where the size of the US population crowds out the impacts of immigrants. However there might be some state or county level impacts, but of course data is needed.

      And given Snowden’s statements in that review on second-hand smoking, methinks perhaps his claims need to be taken with a strong pinch of salt.

  14. Eric Crampton 14
    19 May 2010 at 3:18 pm

    Gottfredson points to IQ differences, but you could also look to differences in individual propensity for risk-taking or conscientiousness. I’ll guess that your reply will be that IQ doesn’t exist. I’ll then reply by arguing that whatever IQ tests measure seems to correlate strongly with other things that seem to measure intelligence and that it also correlates well with income and other social outcomes. You’ll then say that tests are socially constructed and biased; I’ll point to Raven’s progressive matrices as being the most culturally neutral thing possible (as they’re complete geometric abstractions). You might then argue that IQ test results are the result of deprived environments; I’d argue that that makes the stronger case for fixing schools in low-decile areas than it does for broad-based redistribution while further pointing to the rather strong evidence that environmental effects dissipate over time in favour of underlying genetic factors. Your best reply then would be the Dickens-Flynn evidence for gene-environment interaction rather than a straight genetic effect; I’d then reply that the best policy would then remain better schools, not redistribution and that heavy redistribution could have perverse outcomes within the Dickens-Flynn model by reducing the returns to investment in cognitively enriched environments.

    I hope that’s saved a bit of time. Do read the Dickens-Flynn work though as it’s rather good.

    And, of course, Anita is right about the potential for reverse causation where health leads to income rather than the other way round.

    • r0b 14.1
      19 May 2010 at 3:34 pm

      Well good for you, not afraid to come right out and say it: “Gottfredson points to IQ differences”.

      I’ll guess that your reply will be that IQ doesn’t exist.

      Why ever would I say such an odd thing as that? Of course IQ exists, and IQ differences exist.

      The easy caricature of your position is that you’re saying that the poor are dumb so it’s their fault that they’re poor (and also unhealthy etc etc). But let’s go beyond the caricature.

      Yes, you’ve saved us plenty of time. You understand the arguments about genetics. IQ, nature or nurture? Of course it’s a mix of both (quite a complicated interaction according to recent research, Dickens-Flynn, Poulton and the Otago longitudinal study among others). But nurture is massive, staring with maternal nutrition and lifestyle. In short, IQ isn’t a separate underlying “explanation” for inequality effects, it’s part of the same story, part of the evidence, part of the same self-perpetuating cycle. Inequality is (part of) the cause of low IQ as much as it is a cause any of the other poor social indicators above.

      How can you understand the nature / nurture arguments so well, and the implications of them so poorly? You can’t fix this by improving schools in poor areas, that’s a ludicrously impoverished view. School is only a very small part of the environment, of “nurture”. Once again, it starts with maternal lifestyle. It grows with pre-school environment. By the time they get to school, it is already far too late.

      Address inequality, address the environment much more generally, and IQ will rise, social mobility will rise, poor social indicators will fall.

      • Bored 14.1.1
        19 May 2010 at 3:49 pm

        Does that mean rOb that as we get more equal our IQs will collectively increase, we can leave DENSA and make MENSA less exclusive?

      • Eric Crampton 14.1.2
        19 May 2010 at 4:00 pm

        Gottfredson argues that greater cognitive capacity makes it more likely that folks follow doctor’s instructions and, in particular, complete courses of prescribed medication to the end rather than just stopping when they’re feeling better. This doesn’t seem implausible to me.

        Apologies for the caricature. I’d assumed that your “do tell” suggested scorn for the idea of IQ differences.

        I’d argue far less about “fault” and more about whether a particular intervention is likely to lead to desired effects if the proposed causal mechanism is wrong. If things were as simple as “rich folks can afford good food, insulation, heating, and doctors”, then income redistribution would be a more plausible fix to health disparities (leaving aside deadweight costs and longer term effects on growth). But if underlying variables are at play, then the policy won’t be as likely to have the desired effect.

        My best read of the IQ lit is that heritability is very high – best estimate around 0.6. I totally grant your point on maternal pre-natal environment. But, heritability estimates typically come from environments where within-womb effects are fixed: they compare IQ differences between identical and fraternal twins to tease out these effects. I’d also worry that the potential for maternal nutrition to improve low-decile outcomes with sufficient redistribution are overstated. Blackwell’s Pregnancy and Breastfeeding supplement, for example, with a nice mix of folic acid, iron, omega acids and so on, is cheap enough that it’s implausible that just low income explains folks not buying it; I’d also be surprised if such supplements weren’t available by midwife prescription if particular deficiencies were identified. And, a decent healthy diet just isn’t that expensive if you’re careful about things. We often cook dinners that cost on par with or less than takeaways.

        • r0b 14.1.2.1
          19 May 2010 at 4:23 pm

          Not quite sure what you’re arguing at this point Eric. My argument is that if we address inequality then IQ will rise, social mobility will rise and poor social indicators will fall.

          Been a pleasure chatting but I’m off now for a bit.

        • Puddleglum 14.1.2.2
          19 May 2010 at 10:35 pm

          Where to begin?

          Heritability, for a start, is not a measure of the ‘amount’ of intelligence or any other characteristic that comes from ‘the genes’. Heritability is an estimate of the amount of the variance in measures of a characteristic (e.g., I.Q. scores) that can be attributed to genotypes as opposed to epigenetic processes. So, take five people who have IQ scores of 100, 101, 102, 103, 104 and 105. They each have one child. Those children, respectively, have IQ scores of 71, 72, 73, 74 and 75 (or, if you like, 131, 132, 133, 134 and 135). If we assume that all the children experience identical environments then the heritability estimate for IQ will be 1.0 (i.e., 100%). Hang on, though – if IQ has a heritability estimate of 1.0 then why do all the children have IQ scores 30 points lower (or higher) than their parents?

          The ‘answer’ of course, is that heritability estimates have absolutely nothing to say about the causes of IQ scores. Odd, isn’t it? But, there you go – a basic intro to that particular statistic. (Clue: Heritability says something about causes of variation in IQ scores within a particular population, all other things being equal). Having a lower IQ than others could only be said to be primarily genetically determined if one adopted what appears for some to be a particularly seductive assumption: the ‘benign society assumption’. This is the assumption that in our modern, western. liberal democracies we have something approaching a utopian meritocracy in which the main determinant of each person’s life success lies within them. It’s part of ‘our’ myth. It’s a blatantly ideological and political myth but, strangely, it is routinely made by people who seem to think they are being remarkably non-political.

          On your other comments re: inequality. Snowdon’s criticisms are not ‘trenchant’ they are ‘carping’. Simply apply Snowdon’s own criticisms to his ‘selections’ and you’ll get a curiously surreal effect. Why didn’t he want to add Zimbabwe to the Spirit Level graphs, I wonder? Or how about any number of radically unequal third World countries with massively enriched but tiny elites? (Haiti anyone?) Would it simply be that he thinks he can ‘explain’ those cases of poor health outcomes in terms other than ‘inequality’? (e.g., ‘corruption’, ‘poor governance’, etc.) and so he wouldn’t want those cases to ‘obscure’ the effect he wishes to highlight (that ‘inequality’ has no effect on general well-being and may even enhance it)?

          And, as for changes over time within a country (i.e., the Leigh work you highlight), it lacks awareness of that most obvious of effects (and one that I would have thought a non-ideologically driven economist would have instantly recognised): the ‘ceiling’ effect. It’s the classic case of ‘diminishing returns’, since life expectancy increases are almost totally down to lowering of infant mortality, the ‘low hanging fruit’ of improvements in ‘health status’ (between 1850 and 2004 life expectancy for a white seventy year old in the US has increased by a magnificent 2-4 years). That is, the lifespan of humans has barely budged despite all the public health and medical technologies thrown at it.

          The Netherlands (low on LE increases but high on equality improvements on Leigh’s graphs), for example, starts the period with a high overall Life Expectancy. Interestingly, it still managed to improve life expectancy and become less unequal during a period of massive immigration from communities having much lower Life Expectancies. Further, from 1983/4 until 2000 there was actually an increase in mortality amongst the ‘oldest old’ in The Netherlands. Nusselder and Mackenbach (International Journal of Epidemiology 2000;29:140-148) suggested that this might have partly been due to a cohort effect where patterns of smoking at an early age could explain the increases in death by chronic obstructive pulmonary disease (interesting in the light of Snowdon’s and your aversion to anti-smoking ‘zealots’) and – in addition and particularly relevant to the point I’m making – less mortality (and, therefore, ‘selection’) at earlier ages may have resulted in a frailer population of the ‘oldest olds’ as the century came to a close. That is, the Netherlands hit a ceiling and its sterling efforts at younger ages started backfiring at older ages.

          Why is it Eric, that you seem on these and related issues to always push for some pro-free market, libertarian explanation when so many others are begging to be heard?

    • Anita 14.2
      19 May 2010 at 3:53 pm

      I’ll actually argue for compounding not just reverse causation. Someone has poor health, so they earn less, so their health gets poorer, so they earn less, and so on.

      One of my many bugbears at the moment is that if I wasn’t so middle class (and therefore entitled, articulate, high earning and well connected) I’d be either dead or stuck in invalid’s benefit hell. It’s not my IQ that has kept me safe, it’s my sense that someone should be fixing this (and will dammit!), that I can (and do) argue my case with health providers and bureaucrats when needed, that I pay for insurance which allows me to buy my way around roadblocks, and have a wide network of the similarly middle class who know who to go, how to ask, and go into bat for me when necessary.

      When I say “If I was born poor I’d be dead” I mean it – and that’s in our egalitarian society.

      • r0b 14.2.1
        19 May 2010 at 3:59 pm

        It is inspirational to hear stories like this – and there are many of them – I know others who could tell the same story word for word…

        • Anita 14.2.1.1
          19 May 2010 at 4:02 pm

          “inspirational” or “depressing”? I often wonder whether it would be possible to find the other people out with health like mine and apply my middle-class-ness to their lives.

          • pollywog 14.2.1.1.1
            19 May 2010 at 4:44 pm

            Yeah…that’s the other thing about how wealth skews natural selection. Maybe some ‘rich pricks’, like genetically shallow blue blood aristocrats, weren’t meant to survive, but by the millions donated by private donors towards research, it is possible to cheat nature/evolution and prolong life, to continue breeding weak rich offspring.

            I suppose the natural justice thing is, ‘rich pricks’ tend to only breed with ‘rich prickettes’ so in the long run, barring discovering the secret of immortality, they’ll die out soon enough and their wealth will be redistributed.

            And at the other end of the scale, poor people who breed like rabbits, create genetically stronger offspring, as any weakness dies of in infancy and being more adaptable and resourceful to survive, means they can go on to become rich…as long as they play the “aspirational” game.

      • Eric Crampton 14.2.2
        19 May 2010 at 4:17 pm

        There’s one area in which I’ll agree with you completely: midwifery. Connected smart middle class folks know that there’s massive heterogeneity in qualifications among carers, ranging from a few months’ training as a midwife to folks with Bachelors’ of Nursing with a midwife specialization. And so those of us who are least likely to have complications know to move very very fast to secure the services of the highly qualified midwives. The last to move will be the ones most likely to need the more qualified carers and who’ll find that they’re left with the folks who are left. Who I’m sure are nice people, but aren’t going to be as capable as the folks grabbed first. Of course, the reason for the current state is a prior government’s decision to provide fixed compensation to lead maternity carers regardless of qualification.

        If what we care about is that poor people get access to decent health care services, doesn’t it make more sense to give money to poor people coupled with mandates to purchase health insurance rather than have a public health system? In the latter, rationing will typically lead to the well-connected folks getting what they need at the expense of the marginalized; in the former, insurers compete to provide services for poor folks who are able to afford insurance because of the income transfer. Take everything currently spent on government health care, turn it into lump-sum transfers for poor people coupled with mandates that they purchase at least catastrophic health insurance coverage.

        • Bright Red 14.2.2.1
          19 May 2010 at 4:39 pm

          “it make more sense to give money to poor people coupled with mandates to purchase health insurance rather than have a public health system? ”

          No. It doens’t work and you know it doesn’t. You’re assuming informed, time-rich customers who can choose the best option for their needs. What we need is a system that allocates resources to need efficiently and relieves people of being expected to choose between providers when they’re in urgent need.

          Your system sounds horribly complicated and in it all the providers would be profit-making, raising costs.

          ” In the latter, rationing will typically lead to the well-connected folks getting what they need at the expense of the marginalized”

          that assumes corruption. do you ahve any evidence it occurs in NZ? What really corrupts is the profit-motive.

          “in the former, insurers compete to provide services for poor folks who are able to afford insurance because of the income transfer”

          That’s so damn naive. The insurers’ aren’t in the business of paying out, they’re in the business of collecting premiums. They spend huge amounts denying people cover.

          “turn it into lump-sum transfers for poor people coupled with mandates that they purchase at least catastrophic health insurance coverage.”

          The last thing we want is the poor only to have health care in the event of catastrophic health problems. We need more preventative care. It saves health dollars and it’s better for the economy. You want a healthy workforce – that’s the whole reason that smart capitalists agreed to the public health system in the first place. Your model would also be politically unsustainable – health transfers would become treated like benefits are with constant pressure for cuts.

    • NickS 14.3
      19 May 2010 at 4:00 pm

      /sigh

      The problem with IQ is that it can be influenced by cultural factors, but also it’s a rather poor predictor of economic success on its own if memory serves me right, per the holes ripped in to The Bell Curve over the years. And while improving schooling definitely helps, as other research has shown, the home environment also matters, the toys and parental and peer interactions help shape the development of people, and in an environment poor in these, controlling for other factors, there are negative correlations with IQ.

      And since income inequality can be used to predict home environment, it’s easy to draw causal relationships between it and IQ, as the idea would be that increased income allows for greater parental investment into offspring. Of course, it would help if someone handed over the /cluebat and let me loose on various “child-care” guru’s on the tv and other places. Because there’s an astounding amount of evidence-free bullsh*t out there. So, to put it more nicely, much better public education and a better attitude towards the fact it takes a society to raise a child, and that parents don’t always know best would help.

      As for sources, eh, brain fried from sleep deprivation, but it’s various bits from New Scientist, science blogs (not pseudo-science like Watts Up with That?) and observing human stupidity over the years.

      • Draco T Bastard 14.3.1
        19 May 2010 at 4:28 pm

        and that parents don’t always know best would help.

        I’d almost be tempted to say that most parents, quite simply, don’t know how to be parents. As we’ve shifted more from a communal/extended family system to individualism this has actually gotten worse.

  15. Bill 15
    19 May 2010 at 3:54 pm

    27 comments on inequality and the ‘s’ word hasn’t been used once.

    I find that kind of strange…even disturbing… given that socialism comes in many guises and encapsulates left visions of aspiration rather well.

    Anyway. Beyond that, you want to be done with the inequities of Capitalism? You might have to stop being so polite and step right on up and use that there dreaded ‘R’ word.

    Or maybe you just want to whine a little and propose a fiddling and a fuddling and a tinkering with the edges to blunt that there impact a bit…essentially propose the old turning Japanese trick to make things fine?

    • r0b 15.1
      19 May 2010 at 4:00 pm

      You say you want a Revolution?

      • Bill 15.1.1
        19 May 2010 at 4:07 pm

        Are you saying that reforms leading to NZ occupying the space on that graph where Japan is cuts the mustard?

        I’m saying that if you want an end to inequality then you cannot propose that we simply continue operating within a reforming capitalist framework because it has the promotion of inequality built in.

        • r0b 15.1.1.1
          19 May 2010 at 4:15 pm

          Are you saying that reforms leading to NZ occupying the space on that graph where Japan is cuts the mustard?

          It would do for a start! Thing is, I think the only reliable way to actually get from here to there is incrementally. I know you disagree, and go for it, but I’m not up for a big debate on that right now (I’ve already spent too much of the day here – got to go for now).

          • Bill 15.1.1.1.1
            19 May 2010 at 6:56 pm

            Your assumption on my thoughts is plain wrong.

            Maybe you are viewing revolution as an event rather than as a process?

            All processes are incremental although there may well be rather sudden shifts along the way.

            The potential point of difference between us would seem to be where we respectively wish to see things end up. I have no end point as such and no wish to preserve current institutions and systems as they place definite limits on what is perceived as achievable. They also tend to recreate conditions (such as inequality) that I would rather move away from or beyond.

            You want to take NZ to the Japanese location on the graph through reform? I’ll support you all the way. But I don’t want that to be seen as a destination. I want an ‘and’…I want the preparations for the next step to be under way even as we take the step to Japanese levels of inequality or whatever. And as the new aspirations are articulated and acted on, then again I want an ‘and’….

      • pollywog 15.1.2
        19 May 2010 at 4:31 pm

        Prince and the Revolution ?

        reproduction of a new breed of leaders…stand up, organise !!!

  16. all_your_base 16
    19 May 2010 at 5:08 pm

    I was skeptical about the causality stuff as well. Wilkinson and Pickett discuss causality in some depth in Chapter 13, p190 onwards though.

    The most compelling argument for inequality causing poor social outcomes and not the other way round seems to be the fact that “Even when you compare groups of people with the same income, you find that those in more unequal societies do worse that those on the same incomes in more equal societies.”

    They go on to say, “even if there is some loss of income among those who are sick or affected by some social problem, this does not begin to explain why people who remain on perfectly good incomes still do worse in more unequal societies.”

    • nzfp 16.1
      19 May 2010 at 5:22 pm

      Is it a straight income to income comparison? Does it include such things as the cost of housing or the presence or lack of universal health care. In a society such as the US with median house prices requiring two adult incomes to service and the lack of universal health care – it has been demonstrated that a single health event resulting in one of the adults being forced to remain out of work would greatly increase the chances of bankruptcy and foreclosure etc…

      Listen to American economist Professor Elizabeth Warren discuss the issue of “The Coming Collapse of the Middle Class: Higher Risks, Lower Rewards, and a Shrinking Safety Net” at Harvard Law school.

  17. nzfp 17
    19 May 2010 at 5:17 pm

    “It is shocking to me that New Zealand has such high levels of inequality ”

    It is certainly shocking but it is not surprising. Labour’s neo-liberal (Greenspan/Thatcherite) coup-de-tat of the mid eighties followed by successive National/Labour/National adherence to this demonstrably failed economic (religous) dogma has led to exactly where we are – on the slippery slope to a fascist United States.

  18. RedLogix 18
    19 May 2010 at 6:56 pm

    Fanstastic thread everyone, especially to R0b for writing up the OP so well.

    I’ve been too busy today to participate, but I would have loved to…this above all other ideas has perhaps the most explanatory power, and to my mind is the core moral challenge facing the world.

    In the long run I expect that we will not permanently reduce the extremes of wealth and poverty either by revolution or by cleverly designed regulatory fiat.

    In the end we will achieve a more equitable society, when everyone realises that extreme wealth is actually a burden, and that it is in their best interests to behave with fairness and equity to all their fellow humankind. Such a transformation is well within our capacity.

    • r0b 18.1
      19 May 2010 at 10:07 pm

      Cheers RL.

      Such a transformation is well within our capacity.

      I would love for someone to convince me that this is true. How about a post after the budget kerfuffle has died down?

  19. just saying 19
    20 May 2010 at 8:15 am

    Thank you for the above
    I’m so grateful that you brilliant people have articulated something that frightens me and that I believe is a huge issue for the left, the new -‘eugenics’ – meritocracy. The insidious assumption that we have now pretty much achieved a “just” society in which people now inhabit the level in society that matches their abilities and value. Privilege is no longer inherited, it’s earned. It worries me not so much that the rich and privileged believe it, but that, because of the way it has permeated the language, the media, education, every bloody thing, it turns those who are struggling against enormous obstacles, against themselves, and too often, each other, and beomes a big cog the vicious cycles of all the negative indices we’ve been talking about. Talk about self-fulfilling propheseies!
    I’m often not able to express myself very well, so I’m grateful to those of you who have taken the time to tease apart the threads in this matter.
    Anita, I’m not sure if this is what you meant in one of your posts, but I have health problems that I have only survived because of what I’ve always called “middle class nous”. Not ability, intelligence, emotional strenth, moral fibre…… I’ve known people with far more than me of all of these and more, who have died because they didn’t have this lucky, encultured, and certainly not innate repertoire. Many more suffer unnecessarily. The way things are going in New Zealand, more and more people will die or be consigned to society’s scrap heaps with the community including the victims themselves, telling themselves, that science has somehow “proved” that the problem lies within the individual and they only have themselves to blame. That its some kind of sad but inevitable reality.

  20. Chris Snowdon 20
    20 May 2010 at 11:27 am

    Puddleglum,

    I didn’t add in Third World countries for the same reason Wilkinson and Picket didn’t. Their argument is that inequality only affects outcomes after countries have reached a certain level of economic growth. For them, any country from Portugal upwards is wealthy enough. I merely point out that there are a number of countries which are wealthier than Portugal that have been left out, and—would you believe it?—none of them behave as they should do if inequality is the main driver of a nation’s performance. In fact, the least equal countries—Singapore and Hong Kong—tend to do the best.

    RoB,

    Since you’re so fond of the ad hominem, you won’t mind me mentioning that Richard Wilkinson has had a 30 year relationship with the Socialist Health Association and has been accused on several occasions, in peer-reviewed journals, of cherry-picking the counties he looks at when asserting the life expectancy/inequality hypothesis.

    • r0b 20.1
      20 May 2010 at 1:28 pm

      Gidday Chris. I did note other work that you have done, and that it caused me to feel an “instinctive distrust”. If you claim that this constitutes “so fond of the ad hominem” then you’re considerably more guilty of the offence than I am.

      I was unaware of any issues with The Spirit Level research when I wrote this piece, but I’m quite prepared to believe that the authors might have gone too far in trying to present a watertight case. If it’s true, it’s a pity, because it does detract from their message. But it doesn’t mean that their message is wrong, and it doesn’t mean that the mountain of other research with the same result is wrong either. Inequality is damaging to society.

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